GROWTH of remittances from Filipinos abroad slowed to 2.7 percent in January 2024, according to the latest data from the Bangko Sentral ng Pilipinas (BSP).
The data was in contrast to the 3.8-percent growth posted in December 2023 and 3.5 percent in January 2023.
BSP said total cash remittances reached $2.836 billion in January 2024, higher than the $2.762 billion posted in January 2023, but lower than the $3.28 billion posted in December 2023.
“The situation is the world is getting back to normal and migrants abroad have regained their bearings. There may be blips like that slower m-o-m growth but on the overall the world seems to be re-normalizing the hiring of foreign workers now that economies try to get back on track,” Institute for Migration and Development Issues (IMDI) Executive Director Jeremaiah M. Opiniano told BusinessMirror over the weekend.
Opiniano said the month-on-month growth will not be able to paint a full picture of the welfare of Filipinos overseas. However, it was worth monitoring economic developments in Overseas Filipino Worker (OFW) host countries.
“We keep watch on the recessions in some host countries. As always though, the struggles of few countries get complemented by the stability of other countries. So if remittances may have been fewer in some, other countries will cover for that,” Opiniano said.
Rizal Commercial Banking Corporation (RCBC) Chief Economist Micheal L. Ricafort said he expects OFW remittances to continue posting single-digit growth given high inflation that is also being experienced by workers abroad.
According to Ricafort, what is working for OFWs worldwide is the continuation of consumption spending in other parts of the world as the situation normalizes in these countries. Covid restrictions are no longer a policy priority for many countries, allowing the “normalization” to continue, he added.
“Risk of economic slowdown or even recession in the US, as well as in other countries that host large number of OFWs, is partly due to aggressive Fed rate hikes since March 2022 in an effort to bring down/better manage elevated inflation back to the Fed’s target of 2 percent,” Ricafort explained.
“This would still be a drag for OFW remittances especially if there would be job losses for some OFWs, though offset by the economic reopening in China, which is the world’s second biggest economy, since December 2022,” he added.
Meanwhile, BSP said the growth in cash remittances from the United States (US), Saudi Arabia, the United Arab Emirates (UAE) and Singapore contributed mainly to the increase in remittances in January 2024.
In terms of the countries where these remittances originated, the US had the highest share of overall remittances during the period, followed by Singapore and Saudi Arabia.
However, BSP cautioned that the common practice of remittance centers abroad is to course remittances through correspondent banks, most of which are located in the United States—which may skew the source of remittances in favor of the US.
“Remittances coursed through money couriers cannot be disaggregated by actual country source and are lodged under the country where the main offices are located, which, in many cases, is in the US,” BSP noted.
“Therefore, the US would appear to be the main source of OF [overseas Filipinos] remittances because banks attribute the origin of funds to the most immediate source. The countries are listed in order of their share of cash remittances, i.e., from highest to lowest,” it added.
Further, data showed personal remittances from OFs registered $3.15 billion in January 2024, higher by 2.7 percent than the $3.07 billion recorded in the same month last year.
The increase in personal remittances in January 2024 was driven by increased remittances from land-based workers with work contracts of one year or more, and sea- and land-based workers with work contracts of less than one year.
Image credits: Nonie Reyes