By Melissa Luz T. Lopez
Senior Reporter
MONEY SENT HOME by Filipinos working abroad surged in May to the highest level in five months, the Bangko Sentral ng Pilipinas (BSP) reported Monday, signalling continued growth of household spending that contributes close to 60% to gross domestic product (GDP).
Overseas Filipino workers (OFWs) sent home $2.469 billion in cash that month, up 6.9% from the $2.31 billion received in May 2017.
May inflows were also the biggest since December 2017’s record-high $2.741 billion, according to central bank data.
Overseas Filipinos’ cash remittances
In a statement, the BSP said cash remittances from land-based workers grew by 5.3% year-on-year to $1.9 billion, alongside a bigger 13.2% jump in amounts wired by Filipinos working at sea.
By source, remittances from the United States, United Kingdom and Singapore were the “main drivers of growth” that month.
May inflows compare to the 9.2% growth forecast from HSBC Global Research, amid expectations that the cash transfers will see sustained recovery following a 9.8% annualized decline in March.
This brought the five-month tally to $11.822 billion, 4.2% bigger than the $11.346 billion in remittances received in January-May 2017.
Sought for comment, an analyst said the weak peso-dollar exchange rate may have fuelled the rise in remittances. The local unit averaged P52.1948 versus the greenback in May, weaker than the preceding month’s P52.0986.
Michael L. Ricafort, economist at the Rizal Commercial Banking Corp., said OFWs may have taken advantage of currency movements “to get more peso proceeds,” effectively boosting household incomes and spending power of their families back home.
“The resumption of OFW deployment to Kuwait as of May 2018 after a brief deployment ban by the government may have also increased the OFW remittance amount recently,” Mr. Ricafort added.
President Rodrigo R. Duterte ordered Filipinos in Kuwait to return home last February and the government issued a deployment ban soon after reports that an OFW was murdered. The ban was lifted after the two nations signed an agreement early May.
Mr. Ricafort said a pickup in global economic activity coupled with higher world crude oil prices may have also boosted OFW incomes, especially those based in the Middle East.
The US remained the biggest source of remittances worth $3.976 billion year to date, followed by Saudi Arabia ($973.051 million), United Arab Emirates ($882.309 million), Singapore ($743.957 million) and Japan ($634.003 million), according to BSP data.
Mr. Ricafort added that strong remittance growth could contribute to faster second-quarter growth — which state economic managers hope will clock at least seven percent against the government’s 7-8% full-year 2018 target, the first quarter’s 6.8% and 6.6% in April-June 2017 — when the Philippine Statistics Authority reports official data on Aug. 9.
“[F]aster growth in OFW remittances in recent months (especially since the start of 2Q 2018) could possibly contribute to faster Philippine GDP growth in 2Q 2018, after 6.8% in 1Q 2018, among the fastest-growing in ASEAN/Asia,” the economist said.
Cash transfers from OFWs put more money into the pockets of their families back home, which in turn supports domestic activity and overall economic growth.
They also provide a counterweight to the country’s huge import payments.
The BSP expects remittances to touch a new all-time high and grow by another four percent this year, coming from 2017’s record-high $28.06 billion.