Remittances sustain growth in November, but expect Omicron impact

MANILA, Philippines — Money sent home by overseas Filipinos continued to grow a month before the holiday season, but growth is expected to weaken amid a worldwide Omicron variant onslaught.

What’s new

Cash remittances coursed through banks in November last year inched up 5.1% year-on-year to $2.5 billion, the Bangko Sentral ng Pilipinas reported on Friday. The growth was markedly faster than the 2.4% recorded in the previous month.

In the first 11 months of the year, cash remittances grew 5.2% year-on-year to $28.43 billion, faster compared with the same period in 2020.

Why this matters

Remittances are one of the cornerstones of the country’s consumption-driven economy, since money sent home by migrant Filipinos boosts spending capacity of their families here.

For 2021, the BSP projects cash remittances to expand 6%.

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 remittances are expected to post strong numbers by year-end.

"It seems that regardless of the public health and economic challenges during the month of November, overseas migrants worldwide still provide more incomes for their loved ones in home countries. It also seems likely that the Philippines is headed to a significant rebound in year-on-year remittance growth for 2021," Opiniano said. 

The remittance tally has not yet been impacted by the Omicron variant, which was discovered by South African scientists back in November last year. A surge began mid-December for most of the world, wherein the Philippines was struck by rising infections when at the start of 2022.

"By December, of course, major developed countries experienced lockdowns and heightened mobility restrictions. But migrants have found ways to send money. Note though that such remitting efforts confront risks of infection, even as digital remitting (coursed through bank and non-bank channels) have cemented its place in the economic lives of migrants," Opiniano added.

For Jun Neri, lead economist for Bank of the Philippine Islands, remittances could be dampened by the Omicron surge once January figures come in.

"Yes, we expect December growth to be just as strong. A slowdown in January is likely due to Omicron. Remittances, though expected to grow in 2022 will be overshadowed by massive imports translating to a much wider current account and balance of payments deficits versus 2021," he said in a Viber message.

Other figures

• The BSP said 40.7% of 11-month total remittances came from United States, while the rest came from Singapore, Saudi Arabia, Japan, and the United Kingdom.
• Remittance from land-based workers improved by 6.3% year-on-year to $1.968 billion in November. Sea-based workers sent in a total of $534 million, which expanded by 1.2% year-on-year.