Cash remittances at one-year low in September despite 2.3% climb

REMITTANCES logged a one-year low in September despite posting a modest increase, the central bank reported yesterday, which led to tempered consumer spending during the period.
Money sent home by overseas Filipino workers (OFWs) totalled $2.237 billion for the month, up 2.3% from the $2.186 billion inflows received since September 2017, according to the Bangko Sentral ng Pilipinas (BSP).
The amount, however, declined from the $2.476 billion received in August.
September’s total remittances brought the nine-month tally to $21.294 billion, 2.5% higher than the $20.781 billion sent home by migrant workers during the comparable year-ago period. However, the year-on-year growth is slower than the four percent increase expected by the BSP this year.
Cash transfers from OFWs support domestic activity and overall economic growth. Household spending has long been the biggest growth driver, although the share of investments is on the rise.
In a statement, the central bank said land-based workers sent home $16.8 billion during the first nine months, representing a 2.2% increase from last year. On the other hand, those working at sea remitted $4.5 billion so far, up 3.5% from 2017.
Michael L. Ricafort, economist at the Rizal Commercial Banking Corp., said OFWs may have decided to send less cash than usual back home, as the exchange rate still boosted the value of their remittances in peso terms.
The peso averaged P54.0066 versus the dollar in September, weaker compared to the P53.9419 rate a year ago.
“OFWs and their families tend to receive higher peso proceeds/equivalent of their remittances, resulting to higher purchasing/spending power for them,” Mr. Ricafort said. “However, any benefit from a higher US dollar/peso exchange rate for OFWs and their families/dependents may have been offset by higher inflation.”
Filipinos working in the United States were the biggest source of cash remittances in the first nine months of the year. Other major sources are OFWs based in Saudi Arabia, the United Arab Emirates, Singapore, Japan, United Kingdom, Qatar, Canada, Germany and Hong Kong. These countries accounted for 79% of the total inflows.
Remittances usually peak closer to December every year as OFWs send more money in time for the Christmas season, funding increased spending for festivities and gifts during the holidays.
Economic growth eased to 6.1% during the third quarter, the Philippine Statistics Authority reported last week, pulled down by softer consumer spending which eased to 5.2% from 5.9% the previous quarter.
Socioeconomic Planning Secretary Ernesto M. Pernia said authorities are “concerned” about the marked slowdown in household spending on food and other basic products, at a time when inflation is surging to nine-year highs. — Melissa Luz T. Lopez