REMITTANCES from overseas Filipino workers (OFWs) surged in March after a low base from a year earlier, when money sent home was dampened by the government-imposed ban on deployment to Kuwait.
On Wednesday, the Bangko Sentral ng Pilipinas (BSP) reported that cash remittances rose 6.6% to $2.5 billion in March.
The March increase topped the recent high of 3.9% in December.
According to BSP, much of the growth was from the United States, which accounted for two percentage points of the 6.6% rise, while remittances from Singapore and the UK accounted for 1.7 and 1.2 percentage points, respectively.
Banks accounted for $2.5 billion worth of cash remittances in March, up 6.6% year on year.
In the first quarter, remittances rose 4.2% year on year to $7.3 billion. The US accounted for 35.1% of the total. Rounding out the top sources were Saudi Arabia, Singapore, the United Arab Emirates, the UK, Japan, Canada, Qatar, Hong Kong and Kuwait.
These countries accounted for almost 78% of the total in the first three months, the BSP said.
Meanwhile, personal remittances rose 6.4% to $2.8 billion in March.
In the first quarter, personal remittances — a category that estimates the net earnings of all workers on contracts of less than one year and of all sea-based workers, as well as personal transfers by workers on longer contracts, migrants, and capital transfers from households overseas to their relatives in the Philippines — rose 3.7% year-on-year to $8.1 billion.
Michael L. Ricafort, an economist with the Rizal Commercial Banking Corp., (RCBC), said in a mobile message that OFW remittances started to recover after the Philippine government lifted its worker deployment ban to Kuwait. The ban was imposed amid allegations of mistreatment of domestic workers, highlighted by the discovery in 2018 of a worker who was killed, presumably by her employers, and found in a freezer.
“The faster growth in OFW remittances of 6.6% year on year in March 2019 may have to do with lower base/denominator effects a year ago,” Mr. Ricafort said, noting that remittance growth in the same month last year was minus 9.8%.
“OFW remittances started to pick up again after the brief deployment ban in Kuwait early last year. Seasonal increase in OFW remittances also happen in March to fund increased spending for graduation celebrations, preparations for Holy Week holiday-related spending and also for upcoming tuition payments,” Mr. Ricafort said.
Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion, meanwhile, said that the sudden increase in March remittances is a “one-off” which may be due to the need for OFWs to fund tuition and vacations.
“It may be just a one-off event with the expectation that remittances are beginning to slow down,” Mr. Asuncion said.
Nicholas Antonio T. Mapa, ING Bank N.V. Manila’s senior economist, said in an e-mail to reporters: “Overseas Filipino remittances have chugged along at a slow and almost sure pace of 3%-4% despite volatile oil prices, Saudization and several civil wars and recessions. For the time being, the rapid pace of growth in imports given the nascent investment driven growth will outpace the slow and steady growth of remittances and BPOs (Business Process Outsourcing).”
Saudization is the policy adopted by Saudi Arabia to prioritize its own nationals for employment.
“In the long run, we can expect the slow and steady stream of Overseas Filipino remittances and BPO call center receipts to continue chugging along and eventually yield current account surpluses again, once the flash bang of an import binge peters out and this current investment cycle fades,” Mr. Mapa said. — Reicelene Joy N. Ignacio