Economy 3 MIN READ

Remittance growth likely to slow

June 15, 2023By BusinessWorld

Remittance growth is expected to ease in the Philippines amid expectations of a global slowdown and a downtrend in migration, the World Bank said.

“Remittance inflows to the Philippines, which account for about 48% of the total remittances to East Asia and the Pacific Islands, excluding China, are expected to grow by about 2.5% to reach USD 39 billion in 2023 and USD 40 billion in 2024,” it said in its latest Migration and Development brief.

The World Bank’s forecast is lower than the Bangko Sentral ng Pilipinas’ (BSP) projection of a 3% year-on-year growth in remittances for 2023.

In 2022, money sent home by overseas Filipino workers increased by 3.6% year on year to USD 32.54 billion, short of the BSP’s 4% forecast and slower than the 5.1% annual growth in 2021.

The World Bank said the Philippines’ remittance growth last year was due to recent bilateral arrangements with destination governments.

Remittance flows also benefited from the “lifting of the ban on emigration to Saudi Arabia due to the abusive treatment of workers, and specific deals forged by the Philippine government, especially in new Organisation for Economic Co-operation and Development (OECD) destinations.”

“The Philippines and Cambodia are distinct among the larger East Asian countries, with remittances amounting to more than 9% of gross domestic product,” it added.

The World Bank also noted that remittance fees in the Philippines were among the lowest in East Asia and the Pacific.

“The average cost of sending USD 200 to the region decreased to under 3% in the top five least expensive corridors, achieving the Sustainable Development Goal target in 2022,” it said.

“Between the fourth quarter of 2021 and the fourth quarter of 2022, the reduction in the cost of remitting to the Philippines was the greatest among the least expensive corridors,” it added.

The World Bank report showed that the Philippines was the fourth-largest recipient of remittances globally last year, ahead of Pakistan (USD 30 billion) but behind India (USD 111 billion), Mexico (USD 61 billion), and China (USD 51 billion).

Latest data from the BSP showed that cash remittances rose by 3% to USD 2.67 billion in March. This is the biggest monthly inflow recorded since the USD 2.76 billion in January.

For the first three months of the year, cash remittances rose by 3% to USD 8.002 billion, from USD 7.77 billion in the comparable period last year.

This was mainly driven by higher inflows from the United States, Singapore, Saudi Arabia, and the United Arab Emirates.

Meanwhile, the growth in remittance flows to low- and middle-income countries worldwide is also seen to moderate to 1.4% from 8% this year “due to slowing economic growth in major source countries.”

“Some of the weakness in remittances in the Philippines and Thailand is related to a slowdown in emigration triggered by the revival of tourism, which creates more job opportunities for workers at home, thus demotivating a search for jobs in foreign countries,” the multilateral lender said. — Luisa Maria Jacinta C. Jocson

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