September remittances surprise with fastest growth in 29 months

MANILA, Philippines (UPDATE 12:15 p.m., Nov. 17) — Cash remittances crushed expectations anew in September, notching their fastest growth in 29 months and putting them on track to an unexpected growth path during the pandemic by yearend.

Cash inflows coursed through banks rose 9.1% year-on-year to $2.88 billion in September, the Bangko Sentral ng PIlipinas (BSP) reported on Monday. The expansion was the fastest since the 12.7% annual uptick in April 2018.

The surprise surge further trimmed remittance losses this year and put growth within reach. Cash from migrant workers now just down 1.4% year-on-year to $21.87 billion, running way below the BSP’s projected 2% contraction. While the latest data signaled positive development, analysts were not so optimistic of complete bounce-back in the last quarter.

“Being concerned with Christmas remittances may put undue pressure unto these overseas Filipinos. They will send (back money) surely, but do not expect much. If they send more, that’s a bonus,” Jeremaiah Opiniano, executive director at the Institute for Migration and Development Issues, said in an online exchange. 

Indeed, over 750,000 overseas Filipino workers had been displaced by the health crisis, but only around 350,000 opted to go home. For those remaining in their host countries, Opiniano said it was likely that jobless benefits offered got wired as remittance to their families for sustenance.

These subsidies come on top of migrant workers’ savings which Nicholas Antonio Mapa, senior economist at ING Bank in Manila, said are unlikely to get sustained going into the holiday season when remittances typically hit record-highs.

“Overseas remittance flows have swung between gains and contractions in the past few months with lockdowns across the globe and the slowdown in global trade affecting remittances negatively,” Mapa said in a commentary.

“Despite sharp swings, we believe remittances flows may end up about 5% lower for the year with up to 300,000 overseas Filipinos repatriated to the Philippines after job losses in their host countries,” he added.

There are some valid reasons for pessimism. Apart from hundreds of thousands getting laid off, deployment of new workers had also been weak, while an economic reopening had been slow in reviving businesses and jobs that go with them.

Personal remittances, which include hand-carry earnings of those coming home or those sent in kind, likewise went down 1.4% year-on-year to $24.3 billion, data showed.

For now, workers who stayed employed are driving up remittances. Broken down by segment, cash from land-based workers went up 10.2% year-on-year to $2.03 billion, while from seafarers rose 6.5% annually to $570 million in September. These types of earnings, however, remained down for first 9 months.

By region, a sustained increase in remittances from Asia, the US, Africa and South America largely offset a declining trend in Europe and the Middle East. The bulk of inflows still emanated from the US with 40.1% share at $8.71 billion as of September, up 5.6% on-year BSP data showed.

Into other territories, inflows from Asia were greatly supported by those coming from Taiwan, up 15.2% and Singapore, up 9.7% from January to September. Remittances from Hong Kong, Thailand and South Korea likewise posted annual growths of 4.7%, 3.2% and 23%, respectively.

On the flip side, Saudi Arabia 9-month inflows dropped 19.% year-on-year to lead the pull-down of earnings from the Gulf region. Remittances from the United Arab Emirates dropped a bigger 23.3%, and that from Kuwait even larger, at 24.7%. The contractions countered a 9.2% increase in remittances from Kuwait, and 10.3% up from Israel.

Elsewhere, Filipinos in Canada sent 2.2% lower earnings back home in first 9 months, while those in Germany reduced theirs by a massive 27.5% year-on-year.

As cash abroad is expected to get depleted going forward, Opiniano raised concern over their families here and how they can cope from recent disasters. “The concern is the medium-term: how long can the incomes of migrant households hold. Remember typhoons have also swept our country, especially Luzon’s provinces.”

“If migrant households got hit by these typhoons and their properties or farms were washed away, their current economic situations now may be worse off in this pandemic era,” he said.

Editor's note: Article amended to show that BSP revised BSP projection of a 2% drop in remittances this year from the original 5%.