MONEY sent home by overseas Filipino workers (OFWs) likely kept growing in March despite a deployment ban to Kuwait, HSBC Global Research said.
Remittances likely grew by 4.5% during the month, matching the pace clocked in February although slower than the 10.7% increase logged in March 2017.
“We expect March remittances to rise 20.5% month on month, after two straight months of sequential contraction. This would lead to a rise of 4.5% year on year, which is the same as the previous month’s pace,” the bank said in a report released over the weekend.
The Bangko Sentral ng Pilipinas (BSP) will report latest remittances data on Tuesday.
Cash remittances totalled $2.267 billion in February as it logged the slowest growth pace in three months, according to central bank data. However, the figure slipped from the $2.379-billion cash transfers received in January.
If the forecast is realized, March remittances will hit $2.7 billion, improving from last year’s $2.615-billion tally and will mark the highest since the record $2.741 billion tallied in December.
The two-month tally currently stands at $4.647 billion, 7.1% higher than the $4.338 billion received during the comparable period last year.
Remittances fuel domestic consumption, which in turn supports overall economic growth. It also stands as a counterweight to the country’s huge import activities, which keeps the country’s external position at a modest deficit.
The Philippine economy expanded by 6.8% during the first quarter, with household spending contributing 3.9% to overall growth.
HSBC sees cash transfers to post a steady climb this year, despite some disruptions in the Middle East.
“Remittances this year, so far, have largely been driven by inflows from Asia, Europe, and the Americas,” the report read. “Meanwhile, inflows from the Middle East have contracted on a yearly basis since start of 2018, which may be partly due to the Duterte administration’s ban on overseas Filipino workers to Kuwait.”
President Rodrigo R. Duterte announced a deployment ban to Kuwait following the discovery of the body of OFW Joanna D. Demafelis in a freezer in an abandoned apartment back in February.
Kuwait-based Filipino migrant workers were ushered back home following reports of abuse. The Kuwait government staged a protest to the Philippines, saying that this was a violation to their sovereignty and declared Manila’s ambassador as persona non grata.
Tensions simmered leading up to the signing of a memorandum of agreement between the Philippines and Kuwait last Friday, with the deployment ban “partially lifted.”
Remittances from Kuwait have slipped by 13.3% as of end-February, according to central bank data.
HSBC previously said that improving global growth as well as rising oil prices will benefit economies where OFWs are based, which in turn will lift their incomes. Remittance values are also helped by a weaker peso-dollar exchange rate, as the remitted funds have bigger value once converted to into the local currency.
The central bank expects remittances to grow by another four percent this year or above $29 billion versus last year’s $28.06 billion. — Melissa Luz T. Lopez