OFW remittances up by 2% in May

MANILA, Philippines — Money sent home by Filipino expatriates to their loved ones in the Philippines grew by two percent in May, according to the Bangko Sentral ng Pilipinas (BSP).

Personal remittances – the sum of net compensation of employees, personal transfers, and capital transfers between households – went up by two percent to $2.7 billion in May from $2.65 billion in the same month last year.

The BSP attributed the increase to the 1.9-percent increase in remittances sent by land-based workers with work contracts of one year or more to $2.1 billion in May from $2.06 billion a year ago as well as the 1.4-percent improvement in the amount of money sent by sea- and land-based workers with work contracts of less than one year to $540 million from $532 million.

Likewise, the central bank reported that cash remittances coursed through banks grew by 1.8 percent to $2.43 billion in May from $2.38 billion in the same month last year.

“The expansion in cash remittances in May 2022 was due to the growth in receipts from land-based and sea-based workers,” the BSP said.

Remittances from land-based OFWs increased by 1.9 percent to $1.93 billion from $1.89 billion, while the amount of money sent home by sea-based OFWs inched up by 1.3 percent to $494 million from $488 million.

From January to May, personal remittances rose by 2.5 percent to $14.02 billion from $13.68 billion in the same period last year.

The BSP said cash remittances also increased by 2.5 percent to $12.59 billion from January to May compared to $12.28 billion in the same period last year.

In terms of country source, the central bank said the growth in cash remittances from the US, Saudi Arabia, Japan, Qatar, and Singapore contributed largely to the increase in remittances in the first five months.

The BSP sees remittances increasing by four percent to new record levels this year as countries around the world hosting OFWs continue to reopen from strict COVID  lockdowns.

Last year, personal and cash remittances grew by 5.1 percent to record highs of $34.88 billion and $31.42 billion, respectively.

Despite the increase, Rizal Commercial Banking Corp. chief economist Michael Ricafort said OFW remittances volume in May was still among one-year lows partly due to the stronger   dollar versus the peso.

After breaching the 56 to $1 level and hitting its weakest level in almost 18 years, Ricafort said the local currency has depreciated by more than 10 percent compared to the end- 2021 level of 50.999 to $1.

“The stronger US dollar versus the peso reduced the need to send more   dollars, thereby reflecting modest year-on-year growth recently,” Ricafort said.

The peso yesterday lost 37.39 centavos to close at 56.36 to $1 from Thursday’s 56.15 to $1. It opened weaker at 57.35 and hit an intraday low of 56.44.

“Whatever gains OFWs and their families have due to the more peso proceeds in exchange for the dollars, may be offset or negated by higher prices and inflation. So there may still be a need to send more remittances due to higher inflation,” Ricafort said.