Remittances up by 2.7% in January

Cash remittances from overseas Filipino workers (OFWs) rose by 2.7% year on year in January, the Bangko Sentral ng Pilipinas (BSP) said.

Data from the BSP showed cash remittances coursed through banks increased by 2.7% to USD 2.836 billion in January from USD 2.762 billion in the same month last year.   

However, the amount of money sent home by migrant Filipinos was the lowest in two months or since USD 2.719 billion in November.

Month on month, the growth in cash remittances slowed to 2.7% from 3.8% in December. It was also the slowest pace of remittance growth since 2.6% posted in September.

“The growth in cash remittances in January 2024 was primarily due to increased receipts from both land- and sea-based workers,” the BSP said.

Land-based workers sent home USD 2.253 billion in January, up by 3.1% from USD 2.186 billion in the same month last year.

Remittances from sea-based OFWs grew by 1.1% to USD 582 million in January from USD 575.7 million a year earlier.

The BSP said that inflows from the United States, Saudi Arabia, the United Arab Emirates (UAE), and Singapore mainly contributed to the growth in remittances during the month.

Nearly half (41.8%) of total remittances came from OFWs in the United States. This was followed by Singapore (7.3%), Saudi Arabia (6%), Japan (5.8%), the United Kingdom (4.8%), and the UAE (3.3%).

Remittances from the top 10 countries accounted for 80% of overall remittances in January.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that growth in remittances, despite being slower than a year ago, remained a “bright spot” for the economy.

“Further reopening of the economy towards greater normalcy also led to increased spending with some pent-up demand or even some revenge spending by OFW families and dependents,” he said.

Mr. Ricafort noted that remittance growth eased in January from December due to seasonality factors. December is typically when cash remittances are the highest as OFWs send home more money for their families during the holidays.

Mr. Ricafort said remittances could continue to post modest growth for the rest of the year as OFW families “still need to cope with relatively higher prices locally that would require the sending of more remittances.”

Inflation accelerated for the first time in five months in February to 3.4% from 2.8% in January.

For the first two months of 2024, headline inflation averaged 3.1%. This year, the BSP expects inflation to average 3.6%.

“Lack of a global downturn in the developed markets despite the persistent drag of high interest rates and the preference of young, mobile Filipino workers to work offshore because of better compensation and other career opportunities in the post-pandemic period support our forecasts of OFW remittances up by 3% in 2024 and by 2.8% in 2025,” Union Bank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said.

The BSP expects remittances to grow by 3% this year and next year.

Mr. Asuncion said the annual remittance forecasts assume quarterly remittance flows would likely surpass USD 8 billion every quarter, “leading to more than USD 9 billion in the fourth quarter.”

Meanwhile, BSP data also showed that personal remittances, which contain inflows in kind, increased by 2.7% to USD 3.153 billion in January from USD 3.071 billion in the same month a year ago.

“The increase in personal remittances in January 2024 was driven by increased remittances from land-based workers with work contracts of one year or more and sea- and land-based workers with work contracts of less than one year,” the BSP added.

In 2023, cash remittances hit a record-high USD 33.491 billion, up by 2.9% year on year. However, this fell short of the BSP’s 3% estimate and was slower than the 3.6% expansion in 2022. — By Luisa Maria Jacinta C. Jocson, Reporter