MONEY sent home by Filipinos overseas continued to dwindle for the second straight month in April — the biggest drop in almost two decades — as many of them lost their jobs amid a global coronavirus pandemic.
Cash remittances from overseas Filipino workers (OFW) coursed through banks shrank by 16.2% from a year earlier to $2.046 billion, the Philippine central bank said in a statement on Wednesday. This is the widest drop since the 33.5% contraction in January 2001.
Remittances fell by 3% to $9.448 billion in the four months through April, Bangko Sentral ng Pilipinas (BSP) data showed.
The central bank traced the slump to the repatriation of Filipino workers from countries heavily affected by the pandemic, and the closure or limited operating hours of some banks here and overseas during the lockdown.
More than 82,000 Filipino workers from about 60 countries and 132 cruise ships displaced by the coronavirus pandemic have been repatriated, according to the Foreign Affairs department.
Remittances from land-based OFWs dropped by 3.5% to $7.335 billion, while inflows from sea-based workers fell by 1.3% to $2.114 billion.
Cash remittances could have dropped further in May, when quarantine measures were the strictest, Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines, Inc. said in an e-mail.
A potential contraction in remittance inflows could further pull economic growth by 0.4% this year, central bank Governor Benjamin E. Diokno said last month.
Remittance inflows might recover next year, depending on how fast host countries can bounce back from the global health crisis, he said.
The BSP expects remittance inflows to drop by 5% this year after projecting 2% growth in May.
The US was the top remittance source in the first four months, accounting for 29.6% of the inflows, followed by Singapore, Saudi Arabia, Japan, United Arab Emirates, United Kingdom, Canada, Qatar, Hong Kong and Korea. Cash remittances from these countries made up 79.1% of the total.
Cash remittances fell by 4.7% to $2.397 billion in March as the coronavirus pandemic took its toll on host countries and global oil prices plunged.
This was the first contraction since the 2.9% fall in June last year, and the highest decline since the 9.8% contraction posted in March 2018.
In 2019, cash remittance inflows rose by 4.1% to a record $30.13 billion despite global uncertainties and the decline in money sent home from the Middle East.
Personal remittances, which include inflows in kind, plunged by 16.1% to $2.276 billion, also the widest contraction since the 33.5% drop in January 2001. It dropped by 2.9% to $10.494 billion in the four months through April.
Global remittances are expected to fall by 20% this year due to the economic crisis induced by the COVID-19 pandemic and shutdown, according to the World Bank.
The projected decline, which would be the sharpest in history, is largely due to a fall in the wages and employment of migrant workers, who tend to be more vulnerable to loss of employment and wages during an economic crisis in a host country, it said in an April report.
Remittances to low and middle-income countries were projected to fall by 19.7% to $445 billion, representing a loss of a crucial financing lifeline for many vulnerable households.
Remittance flows to the East Asia and Pacific region, which includes the Philippines, were expected to fall by 13% this year from $147 billion in 2019.
Mr. Asuncion said remittances could still bounce back “as overseas workers who have retained their jobs respond to seasonal needs back home, including school enrollment and during the holidays.”
The remittance drop would hit households that use the money for basic needs especially during the pandemic, John Paolo R. Rivera, an economist at the Asian Institute of Management, said in an e-mail.
“They might have to rely on social amelioration and other government subsidies to finance their consumption until their income source is restored,” he added. — Luz Wendy T. Noble