Remittances increase by 3% in February

By means of Aaron Michael C. Sy, News reporter

MONEY SENT HOME from abroad Filipino workers (OFWs) rose 3% in February, the Bangko Sentral ng Pilipinas (BSP) said on Monday.

Central bank data shows that remittances through banks rose to $2.65 billion from $2.57 billion a year earlier.

Month-on-month, the figure was 6.7% lower than January’s $2.84 billion.

Growth in remittances was also faster than 2.7% in January and 2.4% a year ago.

“The increase in remittances in February 2024 was due to the growth in receipts of both agricultural and maritime workers,” the BSP said.

Remittances sent by workers on land rose 3.4% to $2.13 billion, while money sent by workers at sea rose 1.2% to $520 million.

“We have seen the rebound in FebruaryFThis impacted the real value of remittances in the Philippine peso,” said Carlo O. Asuncion, chief economist at Union Bank of the Philippines, Inc. “So that’s what we think about itFThis could pose a challenge until El Niño challenges begin to fade in the second half of 2024.”

InFInflation accelerated from 2.8% in January to 3.4% in February, but this was slower than 8.6% a year ago. February was the third month in a row in which inflation was within the target range of 2-4%.

For the January to February period, remittances rose 2.8% to $5.48 billion, compared with $5.33 billion a year ago.

“The growth in remittances from the United States, Saudi Arabia, Singapore and the United Arab Emirates (UAE) mainly contributed to the increase in remittances in January-February 2024,” the BSP said.

The United States accounted for 41.4% of total remittances in the first two months of the year. Singapore was the second largest source of remittances at 7.3%, followed by Saudi Arabia (5.6%), Japan (5.2%) and the United Kingdom (4.8%).

Other sources of remittances included the UAE (3.8%), Canada (3.2%), Taiwan (2.9%), Qatar (2.8%) and Malaysia (2.5%).

Mr. Asuncion also noted that the share of remittances from Middle Eastern countries had declined.

“I noticed that there was a clear decrease in the share of Middle Eastern host countries, but there was also a clear increase in the share of other host countries such as the US, Japan and the UK,” he said.

In a Viber message, Michael L. Ricafort, chief economist of Rizal Commercial Banking Corp., said the continued rise in remittances is a bright spot for the Philippine economy as it boosts consumer spending.

Meanwhile, personal remittances from OFWs also rose 3% to $2.95 billion in February.

Remittances from workers with contracts of more than one year rose 3.3% to US$2.31 billion, while remittances sent by OFWs with contracts of less than one year rose 1.7% to US$570 million dollars.

Year to date, personal transfers are up 2.8% to $6.1 billion, compared to $5.93 billion a year ago.

Mr Ricafort said he expects modest growth in remittances in the coming months.

“In the coming months, single-digit growth in OFW remittances could still continue as OFW families/dependents still face relatively higher prices/inflation locally, which would require more remittances,” he said.

The risk of an economic slowdown or recession in the US could also hinder growth in remittances as it could lead to job losses for OFWs, Mr Ricafort added.

Mr. Asuncion said he expects remittances to grow 3% this year and 2.8% in 2025.

“We still think remittances will increase as expected, despite rising geopolitical risks, especially in the Middle East,” he said.

Meanwhile, Bank of the Philippine Islands Chief Economist Emilio S. Neri, Jr. said growth in remittances could accelerate due to increased OFW deployment this year.

“OFW deployments reached a record high in 2023…We expect the growing size of overseas Filipinos to send more, just as new workers are sent abroad,” he said.

The BSP expects remittances to grow 3% this year.