MONEY SENT HOME by overseas Filipino workers (OFW) in September grew by the fastest pace in two months, according to data from the Bangko Sentral ng Pilipinas (BSP) released on Friday.
Cash remittances — a key driver of real property demand as well as of household spending that contributes nearly 70% to national output — jumped to to $2.379 billion in September, 6.24% higher than the $2.237 billion in the same month a year ago.
However, this was 8.11% lower than the $2.589 billion logged in August.
The inflows’ 6.24% growth September was the fastest since the 7.5% recorded in July.
Cash remittances in the first nine months of the year grew by 4.2% to $22.2 billion from $21.3 billion during the same period a year ago.
Personal remittances, which include inflows in kind, observed a similar trend as it sealed growth year-on-year by 6.34% to $2.648 billion in September from $2.49 billion while dipping by 7.89% from the August level of $2.875 billion.
Cash remittances from land-based and sea-based workers went up 3.2% to $17.3 billion, and 8% to $4.9 billion, respectively.
The United States continued to be the top source of OFW remittances at 37.5%, followed by Saudi Arabia, Singapore, United Arab Emirates, Japan, United Kingdom, Canada, Hong Kong, Germany and Kuwait.
Economists attributed the month-on-month drop to different factors such as the volatility of the peso-dollar exchange, as well as some tensions in areas where remittances came from.
“Looking at volatility of the peso for September, it seems that the movement has been wide compared to the previous months of August, which was largely in depreciation, and October, which was majorly toward appreciation. September was toward neither of the trends, but volatility was high,” Union Bank of the Philippines, Inc. chief economist Ruben Carlo O. Asuncion said in a email response to BusinessWorld.
Meanwhile, ING-NV Manila senior economist Nicholas Antonio T. Mapa noted of “hefty contractions” from overseas Filipino (OF) remittance sources such as Hong Kong and United Arab Emirates.
“OF remittances sent home from Hong Kong dipped by 7.5% as civil unrest stymies business activities while remittances from UAE plunged by 36% with oil prices subdued. Taken together, remittance flows from these 2 key jurisdictions total 8.2% of total OF flows and could likely weigh on growth going forward,” he said in a note sent to reporters.
Meanwhile, Rizal Commercial Banking Corp. chief economist Michael L. Ricafort said there is usually a “seasonal dip” in September, after the seasonal increase in remittances to pay for tuition payments between May and August.
Security Bank Corp. chief economist Robert Dan J. Roces said that remittances are on its way to recovery amid the upcoming holiday season.
“We expect a pick up towards this holiday season, but conversion could be at a slight disadvantage as the peso appreciates against the dollar. Notwithstanding, the expected uptick in remittances during the holiday season will prop up household consumption for the remainder of the year and thus positively impact on growth,” he said in an email.
The central bank sees cash remittances growing by three percent this year. — L.W.T.Noble