Cash remittances sent by overseas Filipino workers (OFWs) jumped by 3.7% year on year in April, as they continued to support their families amid elevated inflation.
Photo Insert: The growth in cash remittances during the January-to-April period was driven mainly by inflows from the United States, Singapore, and Saudi Arabia.
Data from the Bangko Sentral ng Pilipinas (BSP) showed cash remittances sent through banks stood at $2.48 billion in April, higher than $2.4 billion in the same month in 2022. The growth in remittances was the fastest since 5.8% in December last year.
However, the amount of cash sent home by migrant Filipinos was the lowest in 11 months or since $2.43 billion in May 2022. “The expansion in cash remittances in April 2023 was due to the growth in receipts from land- and sea-based workers,” the central bank said in a statement.
Land-based OFWs sent home $1.94 billion in April, up by 4.3% from $1.86 billion in the same month last year. Remittances from sea-based workers, on the other hand, rose by 2.6% to $547 million in April from $533 million a year ago.
“Cash remittances from overseas Filipinos have remained resilient through the ups and downs of the global economy,” BSP Deputy Governor Francisco G. Dakila said during the Philippine Economic Briefing in Singapore.
China Banking Corp. Chief Economist Domini S. Velasquez said high Philippine inflation and a weaker peso may have prompted OFWs to send more money in April. “Improving economic conditions in host countries such as the US and the UK also helped keep remittance inflows robust. Additionally, the increase in the minimum wage in the UK also likely provided overseas Filipinos with more disposable income,” she said.
Headline inflation slowed to 6.6% in April from 7.6% in March. However, April marked the 13th straight month that inflation breached the central bank’s 2-4% target range. For the first four months of the year, inflation averaged 7.9%.
Security Bank Corp. Chief Economist Robert Dan J. Roces said seasonality, economic conditions in host countries, and the exchange rate affected remittances in April. “Remittances tend to be seasonal, with highs in the months leading up to the Christmas holidays and lows in the summer months including April, especially during school breaks,” Roces said.
High interest rates and elevated inflation around the world also affected the amount of money sent home by OFWs, he said. “The exchange rate for April may also be a factor — the peso weakened against the dollar in April 2023, where the average exchange rate for the month was P55.27 a dollar, weaker than the average exchange rate of P55 a dollar in March,” he said.
“If the exchange rate is weaker, migrant workers will get less pesos for every dollar they send home,” Roces added.
For the first four months of the year, cash remittances increased by 3.2% year on year to $10.49 billion. The growth in cash remittances during the January-to-April period was driven mainly by inflows from the United States, Singapore, and Saudi Arabia.
Nearly half or 41.3% of remittances came from workers in the United States, followed by Singapore, Saudi Arabia, Japan, the United Kingdom, the United Arab Emirates, Canada, Qatar, South Korea, and Taiwan.
Remittances from the top 10 countries accounted for 79.2% of the total during the four-month period. Meanwhile, personal remittances, which included inflows in kind, went up by 3.8% year on year to $2.77 billion in April from $2.67 billion in the same month in 2022. This brought personal remittances to $11.68 billion in the first four months of the year, 3.2% higher year on year.
“Looking ahead, expect remittance growth for the year to stay positive. Remittances were resilient in the depths of the pandemic, and we do not see a massive drop despite a global slowdown,” Roces said.
“Moving forward, we expect remittances to continue posting moderate growth given the resilient US and Asian economies. Remittances from the Middle East would likely remain robust, though declines in oil prices could weigh on the growth prospects in the region,” Ms. Velasquez said. The BSP expects remittances to grow by 3% this year.