Cash remittances up 2.8% in May

CASH SENT HOME by overseas Filipino workers (OFWs) rose to a two-month high in May, data from the Bangko Sentral ng Pilipinas (BSP) showed.

The BSP in a statement on Monday said cash remittances coursed through banks jumped by 2.8% to USD 2.49 billion in May from USD 2.43 billion a year ago.

The amount of cash sent home by OFWs in May was the highest since March when remittances hit USD 2.67 billion.

However, the 2.8% growth in remittances was the slowest in three months, or since 2.4% in February.

“The expansion in cash remittances in May 2023 was due to the growth in receipts from land- and sea-based workers,” the BSP said.

Land-based OFWs sent USD 1.99 billion in remittances in May, up by 2.9% from USD 1.93 billion in the same month last year.

Remittances from sea-based workers, on the other hand, rose by 2.4% to $506 million from USD 494 million a year ago.

“We think that continued growth in remittances was helped by slowing inflation in host countries, which gave overseas Filipinos more disposable income to send home,” China Banking Corp. Domini S. Velasquez said in a Viber message.

She also noted improvements in digital banking services and platforms likely encouraged OFWs to send more money home.

For the first five months of the year, cash remittances grew by 3.1% year on year to USD 12.98 billion.

The expansion in cash remittances during the January-to-May period was mainly driven by inflows from the United States, Singapore, and Saudi Arabia.

Nearly half or 41% of the overall remittances came from workers in the United States, followed by Singapore, Saudi Arabia, Japan, the United Kingdom, the United Arab Emirates, Canada, South Korea, Qatar, and Taiwan.

Remittances from the top 10 countries accounted for 79.5% of the total during the five-month period.

Meanwhile, personal remittances, which include inflows in kind, went up by 2.9% year on year to USD 2.78 billion in May.

In the first five months of the year, personal remittances jumped by 3.1% to USD 14.46 billion.

ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said he expects remittances to grow close to 3% for the rest of the year.

“The sustained and consistent flow of foreign exchange should remain a stable support for the Philippine peso in the months to come,” he said.

Mr. Mapa noted that a global economic slowdown has never resulted in a contraction in remittances, adding that it was only during the global lockdowns that remittances dipped.

“Barring any adverse developments that would comment such a situation, we believe remittances will continue to flow and support growth on the demand side all the while proving a stable source of foreign exchange,” he said.

For her part, Ms. Velasquez said remittance growth may remain modest in the coming months.

“Resilient labor markets in advanced economies will continue to support inflows, but an economic slowdown remains a key risk. However, continued recovery in sectors such as tourism will ensure a stable source of income from OFWs,” she said.

She noted a growing demand for cruise tourism could boost remittances from some sea-based OFWs.

The BSP expects remittances to grow by 3% this year. — Keisha B. Ta-asan