REMITTANCES from Filipinos abroad are likely to continue declining in the coming months after recently posting an eight-month low.
Latest data from Bangko Sentral ng Pilipinas (BSP) showed that personal remittances dipped by 10.9 percent to $2.62 billion in February from $2.94 billion the previous month. This was the lowest since remittances registered at $2.55 billion in June last year.
Year-on-year, however, figures were up by 2.6 percent from $2.56 billion in 2019.
In the first two months, personal remittances climbed by 5 percent to $5.56 billion from $5.3 billion year-on-year.
While the February figure showed a month-on-month plunge, ING Bank Manila Economist Nicholas T. Mapa told the BusinessMirror that it was not able to capture the full impact of the pandemic on the remittance flows yet. Lockdowns in major economies in Europe and the United States only started in March, he explained.
“Going forward we expect remittances to take a tumble as immense pressure from work stoppages and lockdowns challenge even the most determined of our OFWs [overseas Filipino workers],” he said.
Citing government data, Mapa said over 230,000 OFWs were already affected by the pandemic as they seek cash assistance.
A study by the Ateneo Center for Economic Research and Development (Acerd) and Institute for Migration and Development Issues (Imdi), meanwhile, revealed that around 300,000 to 400,000 OFWs will be laid off or receive pay cuts amid the pandemic.
That the top host countries in terms of remittances flows are facing possible recession or zero growth is dampening job prospects for the OFWs as well, Mapa said, noting that half of them are major oil exporters—and oil prices are markedly low right now, which makes their path to recovery longer.
The BSP said the US had the highest share to overall remittances, followed by Singapore, Japan, Saudi Arabia, the United Kingdom, the United Arab Emirates, Qatar, Canada, Hong Kong and Korea.
“All in all, we believe OFWs will continue to fight to get home those remittances, but the challenge posed by Covid-19 appears extremely daunting,” Mapa said.
He said remittances will likely contract by 2.5 percent to 6.7 percent this year.
Former Socioeconomic Planning Secretary Ernesto M. Pernia earlier said that remittances would slip by 20 percent to 30 percent due to the pandemic.
RCBC Chief Economist Michael L. Ricafort, for his part, agreed that OFW remittances could slow down beginning March as many host countries experience the economic pressures caused by the pandemic.
He said that remittances could register nearly zero year-on-year growth or even shrink by at least low single-digit levels beginning March given the current situation.
Still, this can be “offset by some OFWs who could still send money to the Philippines by tapping their savings for the meantime to tide them over during the lockdowns until the restart of the economies in various host countries,” Ricafort told this newspaper.
Sign of recovery
UnionBank Chief Economist Ruben Carlo O. Asuncion, in an e-mail to the BusinessMirror, said OFW remittances may rebound after the lockdown is lifted in host countries, especially those where most of the money transfers occur.
While easing the lockdowns can help recovery, Ricafort said that it would only be seen to pace gradually in the latter part of the year as stringent measures are still in place to contain the virus.
“Positive OFW remittances growth could realistically resume in 2021 largely due to lower base/denominator effects, provided that the deployment of OFWs also picks up again by 2021, especially for many of those OFWs displaced in 2020 to be able to work again overseas by then,” he added.
Globally, the RCBC analyst said the economy is facing a U-shaped recovery and it could take one to two years given that the virus has been contained already.
Personal remittances grew by 3.89 percent to $33.47 billion last year from $32.21 billion in 2018, according to BSP data.