Remittance growth slows in February

By Luisa Maria Jacinta C. Jocson, Reporter

MONEY SENT by overseas Filipino workers (OFWs) grew at the slowest pace in seven months in February, data from the Bangko Sentral ng Pilipinas (BSP) showed.

Cash remittances coursed through banks went up by 2.4% to $2.57 billion in February from $2.51 billion in the same month a year ago, the BSP said in a statement.

This was slower than the 3.5% in January, and the weakest annual growth since 2.3% recorded in July 2022.

February also saw the lowest level of cash remittances in nine months or since the $2.43 billion posted in May 2022.

Month on month, cash remittances declined by 6.9% from the $2.76 billion seen in January.

“The expansion in cash remittances in February 2023 was due to the growth in receipts from land- and sea-based workers,” the central bank said in a statement.

In February, remittances sent by land-based OFWs jumped by 2.6% to $2.06 billion from $2.01 billion in the same month a year earlier.

Remittances from sea-based workers inched up by 1.6% to $509.4 million in February from the $501.4 million a year ago.

Personal remittances, which contain inflows in kind, also went up by 2.4% to $2.86 billion in February from $2.79 billion a year ago. Month on month, it was down by 6.8% from $3.07 billion in January.

China Banking Corp. Chief Economist Domini S. Velasquez said cash remittance growth may have slowed as OFWs sent more money home during the Christmas season.

“A more depreciated peso in February could have worked positively for remittances,” Ms. Velasquez said in a Viber message.

The peso depreciated in February, closing the month at P55.33 on Feb. 28, down by P0.69 or 1.25% from its finish of P54.64 on Jan. 31.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said OFWs continue to send more money to their families to help them cope with rising prices.

“Higher prices locally may have necessitated some continued increase in OFW remittances sent to the country, as well as continued reopening of the economy towards greater normalcy with some pent-up demand that also entailed the sending of more OFW remittances to the country,” he said in a Viber message.

Headline inflation slowed to 8.6% in February, from the 14-year high 8.7% in January, but still above the BSP’s 2-4% target band.

Core inflation, which discounts volatile prices of food and fuel, accelerated to 7.8% in February, from 7.4% in January. This was the quickest rise in core inflation in over 22 years or since December 2000.

For the first two months of the year, cash remittances coursed through banks jumped by 3% to $5.33 billion from the $5.18 billion in the same period in 2022.

Personal remittances rose by 3% to $5.93 billion in the January-to-February period, from $5.76 billion in the same period in 2022.

“The growth in cash remittances from the United States, Saudi Arabia, Singapore, and Qatar contributed mainly to the increase in remittances in January-February 2023,” the BSP said.

Nearly half or 41.6% of total remittances came from OFWs in the United States, followed by Singapore (7.3%), Saudi Arabia (5.5%), Japan (5.3%), United Kingdom (4.7%) and the United Arab Emirates (3.7%).

Ms. Velasquez said she also expects moderation in remittances as global economic growth wanes.

“Remittances from the United States, the biggest source, will likely slow down as prospects of a hard landing increase. Layoffs and the possibility of a recession will curtail the sending of remittances. In the Middle East, a decline in oil prices will likely inhibit economic growth of the region,” Ms. Velasquez added.

Union Bank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said remittance growth may have already peaked.

“It’s still positive growth, but it has confirmed that the peak of remittances performance from the previous months has already passed. Nevertheless, the 2.4% growth in February is still respectable,” he said in a Viber message.

“This slower monthly growth may mean that OFWs are anticipating the impact of external headwinds. They may also be saving up and waiting for the right time to send money back home especially when recipient families need the inflow support,” he added.

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

Mr. Asuncion said he still expects remittances to grow by 2-4% this year “despite of the incoming global challenges.”

The International Monetary Fund gave a 2.8% global growth forecast for 2023, which it said, “is not enough to bring opportunities to businesses and people around the world.” It also projects “weak” global growth of around 3% through 2028.

In 2022, cash remittances hit a record high $32.54 billion, up by 3.6% from $31.42 billion in 2021.