By Melissa Luz T. Lopez
OVERSEAS FILIPINO workers (OFWs) sent more money home in February than a year ago even as it was the smallest increase in three months, the central bank reported on Monday.
Such remittances totalled $2.267 billion for the month, up 4.5% from the $2.169-billion inflows tallied in February 2017, the Bangko Sentral ng Pilipinas (BSP) said.
However, February’s inflows were the smallest in three straight months.
February’s year-on-year growth pace is likewise the slowest since a two percent increase recorded in November.
Despite the decline, February remittances brought the two-month tally to $4.647 billion, 7.1% more than the $4.338 billion received in last year’s comparable period.
The growth in cash remittances came as money transfers from both land-based and sea-based workers rose by 6.4% to $3.7 billion and 9.8% to $1 billion, respectively, the BSP said.
The United States remained the biggest source of inflows at $747.049 million, which accounted for 1.2% of the overall growth in February.
Other major sources of funds were the United Arab Emirates ($196.377 million), Germany ($76.181 million) and Malaysia ($39.422 million), the central bank said.
The central bank expects remittances to grow by another four percent this year to above $29 billion, which if realized will mark another banner year. In 2017, remittances grew by 4.3% to reach $28.06 billion, beating a four percent growth forecast.
Remittances fuel domestic consumption, which in turn supports overall economic growth.
They also counterbalance the huge import payments which keeps the country’s external position in deficit.
One analyst said household spending likely remained robust despite a slowdown in remittances received in February, as the exchange rate — which boosted the dollar by 3.7% — meant more bang for their buck once converted to the peso.
“As a result, this has reduced the required US dollars needed to be sent by OFWs to the Philippines, given the higher value of the US dollar vs. the peso (i.e. less US dollars needed for the same amount of pesos),” Michael L. Ricafort, economist at the Rizal Commercial Banking Corp. (RCBC), said when sought for comment.
In turn, this gives families of OFWs more disposable income, Mr. Ricafort said, explaining: “This still supports greater consumer spending growth, which, in turn, may still underpin faster economic growth, going forward.”
Latest Philippine Statistics Authority data show household spending — which contributed the biggest share of 57.5% to the economy last year — growing by 5.9%, 6.0%, 5.4% and 6.2% in the first to fourth quarters of 2017, leading to a 5.9% full-year increase that was a marked slowdown from 2016’s 7.1%.
RCBC’s Mr. Ricafort noted that some migrant workers may have held on to their salaries waiting for an “optimal” peso-dollar exchange rate.
The peso averaged P51.7856 to the greenback in February, weaker than the P49.9614 average recorded during the same month last year, according to BSP data.
Still, analysts at HSBC Global Research believe that remittances will likely grow faster this year amid improving global growth led by the United states, as well as rising oil prices which in turn will benefit economies in the Middle East where many OFWs are based.