Unfazed by Delta surge, remittances sustain growth in August

MANILA, Philippines — Money sent home by Filipinos overseas continued its rise in August, unfazed by another wave of infections globally fueled by the Delta variant.

What’s new

Cash remittances coursed through banks rose 5.1% year-on-year in August to $2.61 billion, the Bangko Sentral ng Pilipinas reported on Friday. This growth was faster compared to 2.5% recorded in July.

In the first eight months of 2021, cash remittances grew 5.7% year-on-year to $20.38 billion.

Why this matters

Remittances are one of the backbones of the Philippines' consumption-driven economy, as money sent home by migrant Filipinos helps increase the spending capacity of their families here.

Remittances are also crucial sources of dollars for the country. For this year, the BSP forecasts cash remittances to grow 6% that, if realized, would be a significant turnaround from the 0.8% slump posted last year when the pandemic crunched the global job market.

What analysts say

Sought for comment, Jeremiah Opiniano, professor at the University of Santo Tomas and executive director at the Institute for Migration and Development Issues, said the increase in remittances point to a hopeful sign: the global economy is indeed on the mend.

"Cash remittances by overseas Filipinos continue their rise from a year ago amid the pandemic. This trend provides signals that slowly, economies in the countries of destination are picking up steam," Opiniano said.

But central bank data also showed cash remittances were down 8.6% month-on-month. Opiniano said the sequential drop was not as significant compared with the same month last year.

"The month-on-month drop in today's context prevails in a more favorable situation wherein vaccinations have reached millions and economies have regained business activities (with people going out even mask-less). Compare that to August last year when there no vaccines developed and some countries dilly-dallied in opening their economies," he said.

Nicholas Antonio Mapa, senior economist at ING Bank in Manila, explained that despite the growth in August, the latest figure fell below analysts’ expectations of a double-digit inflows.

"The stronger dollar allowed overseas Filipinos to hold back some of the flows to rebuild some of the savings drawn down from last year," Mapa said in an e-mail exchange.

"Going forward we expect remittances to continue to expand but moderation in the coming months may be expected given the recent weakness of the peso. By year end remittances will likely expand 5% for the year," he added.

Other figures

• The BSP said 40.4% of 8-month cash remittances came from United States, while the rest came from Singapore, Saudi Arabia, Japan, and the United Kingdom.
• Remittance from land-based workers inched up by 4.1% year-on-year to $2.03 billion in August. Sea-based workers brought in a total of $577 million, which expanded by 8.6% year-on-year.