Cash sent home by Filipinos abroad contracted for the first time in 12 years in August, although economists said this is not a cause for concern yet, as seasonality could be in play.
Data released by the Bangko Sentral ng Pilipinas (BSP) on Thursday showed cash remittances from overseas Filipino workers (OFWs) declined by 0.6 percent in August to $2.044 billion. This is lower compared to the previous month’s inflows at $2.078 billion and August 2014’s $2.054 billion.
From January to August, however, cash-remittance growth remained in the positive territory at 4.1 percent to $16.2 billion.
The BSP did not readily give an explanation on the drop in cash sent home by OFWs. Economists, however, said the fluctuations in remittances are normal, since the level has plateaued for now.
“There is no major long-term changes in the movement of overseas workers, so as of now, I think, we are still on course to hit the 5-percent target at the end of the year,” said Alvin Ang, professor of economics at the Ateneo de Manila University.
He said the bulk of remittances will still come in the fourth quarter, and, as long as there is no prolonged Middle East issues, any decline in the previous months would still be compensated by the inflows in October-to-December period.
Benjamin E. Diokno, former budget secretary and professor at the University of the Philippines School of Economics, said the decline in August was just a temporary blip.
“It should not be a cause for concern; probably they [OFWs] are just saving for the holidays,” he said, noting that the country’s gross international reserves are still good for one year.
This is the first drop in cash remittances on a yearly basis since April 2003, when the money sent home by OFWs fell by 10.9 percent.
But the growth of monthly remittances has been relatively shaky in 2015. On a month-on-month basis, growth hit a low of negative 0.6 percent to a high of 11.3 percent in the first eight months of the year. This is contrary to the growth pace seen in 2014, which settled mostly on the 5 percent-to-8 percent range.
Last month BSP Deputy Governor for the Monetary Stability Sector Diwa C. Guinigundo said the recent slowdown in remittances—most evident in the first eight months of the year—is a sign that the remittance business is reaching its so-called maturity stage.
Guinigundo said remittances being “more mature” in the cycle means that the previously high-growing foreign-exchange inflows in the country already had a high base because of the years of expansion, making it harder to sustain.
He also reiterated during that time that the BSP’s growth assumption of 5 percent to 6 percent remains “appropriate.”
Cash remittances from land-based and sea-based workers totaled $12.4 billion and $3.8 billion, respectively.
The bulk of cash remittances came from the United States, Saudi Arabia, the United Arab Emirates, the United Kingdom, Singapore, Japan, Hong Kong and Canada.
“The steady deployment for OFWs continued to provide support to remittance inflows,” the BSP said, noting preliminary data from the Philippine Overseas Employment Administration (POEA)
The central bank said data from the POEA showed that for the January–to-August period, total job orders reached 584,816, of which 41.5 percent were processed.
These job orders were intended mainly for service, production and professional, technical and related workers in Saudi Arabia, Kuwait, Qatar, Taiwan and Hong Kong.
Personal remittance—or the remittances both in cash and in kind —hit $17.9 billion in the first eight months of the year.
(With Cai U. Ordinario)
2 comments
This article shows the total hypocrisy of this so-called economic growth scenario being peddled by every economist singing hosannas for this administration. This so-called growing resilient economy is nothing more than a remittance center economy. People receive OFW money and they spend it on basic necessities. That is all that this is economy about. No fancy economic terms can change that fact. For all that BSP says it can do, take away all those remittances and the BSP wont be worth the the digital letters in this article.
Beware the property bubble looms in the very near future….the dream of every filipino owning a house and lot and by extension condo….has already put the OFW in debt… what follows is only inevitable…PROPERTY BUBBLE.