By Melissa Luz T. Lopez, Senior Reporter
CASH remittances slipped to a two-month low in June due to smaller flows from the Middle East, the Bangko Sentral ng Pilipinas (BSP) reported on Tuesday.
Money sent home by overseas Filipino workers (OFWs) totalled $2.357 billion that month, down from May’s $2.469-billion inflows and 4.5% lower than the $2.467 billion received in June 2017.
This is the smallest amount of remittances seen since April’s $2.347 billion and settled lower than market expectations, according to central bank data.
ING Bank had expected remittances to rise by 5.3% in June, versus a consensus forecast of 5.4%.
The BSP said cash remittances declined on the back of smaller amounts sent by Filipinos working in the United Arab Emirates (UAE), Saudi Arabia and Kuwait.
“The overseas Filipino workers repatriation program of the government may have partly affected the remittance flows for the month,” the central bank said in a statement, noting that a total of 4,149 OFWs have been brought home from the three countries during the first two months of 2018.
In February, President Rodrigo R. Duterte asked Filipinos in Kuwait to return home amid reports of abuse, and ordered a deployment ban soon after. The ban was lifted in May following an agreement signed by the two nations.
June’s inflows brought last semester’s total to $14.179 billion, 2.7% more than the $13.813 billion logged in last year’s comparable six months. That compares to the central bank’s forecast of a four percent growth in remittances for the entire 2018.
Cash transfers from OFWs deepens pockets of their families back home, which in turn helps fuel overall economic growth. Household spending in proportion to national output steadied at about 56% last semester from a year ago, though growth of this segment slowed to 5.7% compared to the year-ago 5.9%, according to latest available data which the Philippine Statistics Authority released on Thursday last week.
Overall economic growth slowed to six percent last quarter, compared to a downward-revised 6.6% climb in the first three months.
Remittances also act as a counterweight to growing import payments that have been driving the country’s current account balance deeper into deficit, in turn making the peso weaker against the dollar.
The BSP expects remittances to touch a new all-time high and grow by another four percent this year, coming from the all-time high of $28.06 billion in 2017.
Preliminary data from the Philippine Overseas Employment Administration showed that OFW deployment has eased, with land-based workers dropping by 3.28% and those working at sea falling by 14.6%.
By country, the United States remained the biggest source of remittances last semester. It was followed by Saudi Arabia, Singapore, the United Kingdom, UAE, Japan, Qatar, Germany, Hong Kong and Canada, according to the BSP, noting that these countries accounted for more than 79% of total cash remittances in 2018’s first six months.
Sought for comment, Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, said “[t]he lower-than-expected 4.5% remittance [drop] may be temporary because we have seen this as well last year. We expect it to recover in the coming months.”
In 2017, remittances posted annualized declines in April (5.9%) and September (8.3%) but grew in the other 10 months.
Mr. Asuncion said he had expected a 5.4% growth in remittance inflows to around $2.6 billion for June.
Still, he said the softer increase in remittances had “minimal” impact on household spending, which eased to 5.6% during the second quarter from the 5.7% pace logged in January-March at a time of rising commodity prices. Such consumption had grown by faster 5.9% and six percent in last year’s first and second quarters, respectively.