Remittance growth slows in October

Cah remittances from overseas Filipino workers (OFW) rose by 2.7% in October, the slowest growth in four months, data from the Bangko Sentral ng Pilipinas (BSP) showed.

Data from the central bank showed that cash remittances increased to USD 3.08 billion in October from USD 3 billion in the same month a year ago.

The remittance growth rate was the weakest since the 2.5% logged in June this year. October also marked the first time in four months that growth fell below 3%.

“The expansion was seen in remittances from both land-based and sea-based workers,” the BSP said.

Remittances from land-based workers jumped by 3.2% year on year to USD 2.48 billion, while money sent by sea-based workers inched up by 0.6% to USD 602.35 million.

Personal remittances, which include inflows in kind, also rose by 2.7% to USD 3.42 billion in October from USD 3.33 billion a year ago.

Remittances from workers with contracts of one year or more increased by 3% to USD 2.68 billion, while money sent home by workers with contracts of less than a year went up by 1.3% to USD 670 million.

In the January-October period, cash remittances grew by 3% to USD 28.3 billion from USD 27.49 billion a year earlier.

As of end-October, cash remittances from land-based workers jumped by 3.4% to USD 22.62 billion, while those from sea-based workers inched up by 1.4% to USD 5.69 billion.

“The growth in cash remittances from the United States, Saudi Arabia, Singapore, and the United Arab Emirates contributed mainly to the increase in remittances in January-October 2024,” the BSP said.

The US accounted for 41.2% or the biggest share of overall cash remittances in the 10-month period.

This was followed by Singapore (7.1%), Saudi Arabia (6.2%), Japan (4.9%) and the United Kingdom (4.8%).

Other top sources of remittances include the United Arab Emirates (4.3%), Canada (3.5%), Qatar (2.8%), Taiwan (2.8%), and South Korea (2.5%).

Meanwhile, personal remittances rose by 3% to USD 31.49 billion as of end-October from USD 30.57 billion in the comparable year ago period.

John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said that the latest remittance data reflect global uncertainty.

“First is global economic uncertainties. Economic challenges in host countries, such as inflationary pressures or slower economic growth, may have reduced disposable income for OFWs limiting the amount they can remit,” he said.

Geopolitical tensions in top remittance sources such as the Middle East, Europe and the United States also impacted remittance flows, he added.

Mr. Rivera said October typically sees slower remittance growth “as OFWs prepare to send larger amounts closer to the holiday season (e.g., November and December).”

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the weaker peso during the month “would require the sending of less OFW remittances to pay the same amount of expenses in pesos that, in turn, would have led to slower year-on-year growth in OFW remittances.”

The peso depreciated to PHP 58.1 against the greenback at end-October from the PHP 56.03 per dollar at end-September.

For the remainder of the year, remittances are seen to continue to increase, especially during the holiday season.

“In the coming months, growth may accelerate in November and December due to the holiday season. Sustained demand for OFWs in high-income countries and the potential easing of inflation globally could also support a rebound,” Mr. Rivera said.

On the other hand, Mr. Ricafort cited risk factors such as the incoming Trump administration’s strict immigration policies that could dampen remittances next year.

“Possible protectionist policies by US President-elect Donald J. Trump, who will start office on Jan. 20, 2025, that could tighten immigration rules in the US in an effort to create and protect more jobs for US citizens, thereby potentially slow down OFW remittances from the US,” he added.

The central bank expects cash remittances to grow by 3% this year and in 2025. – Luisa Maria Jacinta C. Jocson, Reporter