Remittances in June biggest in three months

By Melissa Luz T. Lopez
Senior Reporter

MONEY SENT HOME by overseas Filipino workers (OFWs) — a driver of household spending that contributes more than 73% to gross domestic product (GDP) — grew faster in June to hit a three-month high amid strong deployment, the central bank said yesterday.

Cash remittances grew by 5.7% to reach $2.467 billion that month, rising 5.7% from the $2.334 billion posted in June 2016. It also picked up by 6.8% from May’s $2.31-billion inflow and is the highest since the record-high $2.615 billion in March, according to data of the Bangko Sentral ng Pilipinas (BSP).

In a statement, the central bank said the bigger remittances came on the back of steady growth seen in amounts sent by land-based OFWs that rose by 3.8% to $1.9 billion, coupled with a 13.3% jump from those working at sea.

For that month alone, cash transfers from Filipinos in the United States and the United Arab Emirates posted the biggest increases, each contributing 1.9 percentage points to growth.

June inflows brought the first-semester tally to $13.813 billion, up 4.7% from $13.192 billion recorded in 2016’s comparable six months.

The BSP attributed the steady growth in remittances to “stable” demand for workers, with 1.14 million OFWs deployed as of end-June.

One analyst said Filipinos likely chose to send more money home to help their families meet school-related expenses as classes opened in June, and as they sought to get more out of their earnings with the weaker peso.

“We estimate the peso to have depreciated by 1.4% in June alone. This may have probably induced OFWs to take advantage of the stronger US dollar vis-à-vis the peso by remitting more,” said Angelo B. Taningco, economist at Security Bank Corp.

“I think remittance growth could rise further in the subsequent months on the back of a peso depreciation and steady demand for OF workers abroad.”

The peso traded around P49 to the greenback earlier that month, but has hovered weaker than P50 to the dollar since June 20.

Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, added that the robust growth in remittances likely fueled faster GDP growth last quarter. The government is scheduled to report second-quarter GDP data tomorrow. “This robust increase… continuously supports household consumption and consequently boosts domestic investment. Looking at Q2 GDP growth, the sustained increase of remittances more likely quickened the anticipated uptick in domestic economic expansion.”

The BSP expects remittances to git a record-high $28 billion this year, four percent more than last year’s $26.9 billion.