Despite the shaky growth of remittances in the past few months, a Moody’s Analytics economist remains confident that dollar inflows from overseas Filipino workers (OFWs) will return to a more solid growth rate next year.
Moody’s Analytics economist Jack Chambers told the BusinessMirror the likely cause of weaker remittance growth in recent months is coming from external factors.
Cash remittances by OFWs saw a 1.9-percent growth in May—to $2.188 billion against the same month’s inflow of $2.126 billion last year.
This is one of the slowest monthly growth rate for the country’s dollar remittances, second only to the 1.2-percent contraction in March.
This puts the growth of remittances in the first five months of the year at 2.9 percent to $10.86 billion. The government’s growth projection for OFW remittances this year is about 4 percent.
“We’re not overly concerned about the recent weakness in remittances. The likely cause of this is the weakness in the global economy generally and, more specifically, the negative effect of lower oil prices on oil exploration and extraction-related job opportunities for Filipinos working abroad,” Chambers told the BusinessMirror.
The Moody’s Analytics economist said he is confident of better growth rate in OFW remittances as he expects Filipino migrants to send more money home next year, when the global economy improves.
“Obviously, there is little that the Philippines can do about these external factors. But we expect improvements in the global economy from early 2017 and for oil prices to increase moderately throughout the rest of 2016. These factors should boost remittance flows,” he said.
Earlier, the Bangko Sentral ng Pilipinas (BSP) partly blamed the international banks’ derisking practices as a contributing factor to the lower growth of remittances.
In a recent interview, BSP Deputy Governor Diwa C. Guinigundo told reporters the central bank is still monitoring the “derisking” practices of banks—or the international banks’ new set of policies aimed at restricting or terminating certain operations to lessen their exposure to risks.
“It is not really a cause of ‘worry.’ It is a concern. It’s something that we should continue to monitor because a large part of our external payments position is dependent on the level of remittances,” Guinigundo said.
“It’s good that we have the BPO [business-process outsourcing] sector, which serves as a counterweight to remittances. The sector is growing by at least 15 percent to 20 percent. With its growing pace—a 15 percent to 20 percent is significant—it somehow mitigates the apparent slowdown in overseas remittances,” he added.