The Bangko Sentral ng Pilipinas (BSP) reported on Monday a 7.8 percent rise in remittances by Overseas Filipino Workers (OFWs) in August this year, compared to the same month last year.
Cash remittances – or money sent by Filipino workers through banks – hit $2.5 billion in August alone, up significantly from the $2.3 billion recorded in August last year, the BSP said.
The 7.8 percent acceleration is the largest year-on-year growth since March this year, which posted a 10.7 percent expansion. Remittances to the country have been growing in the 7-percent territory for two consecutive months, with last month’s growth reaching 7.1 percent.
By country source, the BSP identified the United Arab Emirates (UAE), United States, Singapore and Qatar as the primary contributors to the rise in cash remittances during the month.
The positive development in the volume of remittances in August brought the total cash sent by OFWs back home to $18.6 billion – 5.4 percent larger than the $17.6 billion seen in the same eight-month period last year.
By remitter source, both land-based and sea-based workers contributed to the growth of the total remittances for the first eight months of the year, with land-based workers growing by 6 percent from last year and contributing $14.7 billion to the total, while sea-based workers remittances grew 3.2 percent in January to August this year to contribute $3.9 billion compared to the same period last year.
The bulk of the total cash remittances for the January to August period – 82.5 percent in particular, came from the United States, Saudi Arabia, UAE, Singapore, Japan, United Kingdom, Qatar, Kuwait, Germany and Hong Kong.
Remittances to the Philippines have been known to fuel domestic consumption– one of the pillars of the economy’s resilient growth in recent years. Cash sent by Filipino workers abroad also provide support to the country’s external position.
The BSP earlier said they are banking on strong remittance inflows, as well as tourist receipts and business process outsourcing (BPO) revenues to drive the recovery of the country’s Balance of Payments (BoP) position for the year.
ING Bank Manila economist Joey Cuyegkeng said the margin between remittances and the trade deficits has practically disappeared despite the upside surprise of remittances for August.
“August saw only less than $100 million excess in remittances. This follows an excess of $670 million in July. Since 2016, the margin has been erratic and would likely remain so in the coming months,” Cuyegkeng said.
“This would keep the peso on the defensive bias. A hawkish BSP would moderate the weakening bias,” he added.