November cash remittances sink to 6-month low

Money sent home by overseas Filipino workers (OFWs) reached USD 2.719 billion in November — the lowest in six months — amid geopolitical tensions in the Middle East and a stronger peso against the dollar. 

Cash remittances grew by 2.8% from USD 2.644 billion a year earlier, according to data released by the Bangko Sentral ng Pilipinas (BSP) on Monday.

The growth in cash remittances was the slowest annual pace since the 2.6% in September.

The amount of money sent by OFWs to the Philippines was also the lowest since USD 2.494 billion in May 2023.

Month on month, remittances declined by 9.3% from USD 2.998 billion in October. 

In a statement, the BSP attributed the year-on-year growth in cash remittances to higher receipts from land- and sea-based workers. 

Cash remittances from land-based OFWs jumped by an annual 2.9% to USD 2.14 billion in November, while inflows from sea-based workers increased by 2.6% to USD 579.747 million.   

Union Bank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said migrant workers typically send more cash remittances in the fourth quarter.   

“October, November and December are peak remittance months, and we see that OFWs send more usually for the holiday celebrations and spending for their recipients,” he said.   

China Banking Corp. Chief Economist Domini S. Velasquez said the month-on-month slowdown in cash remittances was due to reduced inflows from the United States, the country’s main source of remittances.   

Based on BSP data, cash remittances from the US stood at USD 1.041 billion, 13.3% lower than USD 1.2 billion in October.   

“Remittances from the Middle East also stalled, possibly due to the challenging conditions faced by OFWs amid escalating tensions in the region,” Ms. Velasquez said.   

The Middle East has been on high alert amid fears of a wider conflict since Hamas militants launched a surprise attack on Israel in October 2023.    

“The lower dollar-peso exchange rate in the latter part of November might have dissuaded Filipinos from sending money back home,” Ms. Velasquez said.   

ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa noted that the peso appreciated against the dollar in November compared with a year ago.   

The peso closed at PHP 55.485 versus the greenback on Nov. 30, appreciating by 2.2% or PHP 1.245 from its PHP 56.73 close on Oct. 31. The peso was also significantly stronger than its PHP 56.56 finish at the end of November 2022.   

“On a positive note, remittances from Europe, particularly from the United Kingdom, surged in November as its economy showed a subtle rebound coming from a previous decline,” Ms. Velasquez said.   

For the January to November, cash remittances coursed through banks rose by 2.8% to USD 30.211 billion from USD 29.38 billion a year earlier.   

Still, this was below the BSP’s 3% remittance growth projection for 2023.

In the 11 months to November, the BSP said there were higher inflows from the United States, Saudi Arabia and the United Arab Emirates (UAE).

The United States was the biggest remittance source with a 41.2% share. It was followed by Singapore (6.9%), Saudi Arabia (6%), Japan (5%), the United Kingdom (4.7%), UAE (4.3%), Canada (3.6%), Qatar (2.8%), Taiwan (2.7%) and South Korea (2.5%). 

Remittances from the top 10 countries cumulatively made up 79.7% of the total during the 11-month period. 

Meanwhile, personal remittances, which include inflows in kind, rose by 2.9% to USD 3.017 billion in November from USD 2.931 billion a year ago. 

This brought the year-to-date level to USD 33.585 billion, up by 2.9% from USD 32.649 billion a year earlier. 

“We can expect remittances to sustain their growth to support domestic consumption, as well as provide the backbone for foreign currency flows, helping limit the impact from the chronic trade deficit,” Mr. Mapa said.   

Latest data from the Philippine Statistics Authority showed a trade deficit of USD 4.17 billion in October, against the USD 3.31-billion deficit a year earlier.    

Export revenue dropped 17.5% year on year to USD 6.36 billion in October, while merchandise imports declined by 4.4% to USD 10.54 billion.

“Looking ahead, we anticipate a decent growth in remittances, driven by the sustained demand for Filipino labor. Wage increases in Hong Kong and Taiwan in 2024 will also contribute to the growth of remittances,” Ms. Velasquez said.   

The central bank expects remittances to have grown by 3% in 2023. It also sees remittance growth at 3% this year.