By Luz Wendy T. Noble
MONEY SENT HOME by overseas Filipino workers (OFW) grew for the second straight month in August — by a slower pace than in July, although it was still a turnaround from the year-ago slump — according to data the Bangko Sentral ng Pilipinas (BSP) released on Tuesday.
Economists said July’s and August’s increases bode well for household spending, which fuels about 70% of gross domestic product (GDP). The Philippine Statistics Authority will report third-quarter GDP data on Nov. 7.
OFW cash remittances grew 4.6% to $2.589 billion in August from $2.476 billion a year ago, and by 0.31% from July’s $2.581 billion, central bank data showed.
August’s increment was smaller than July’s 7.5% but was still a turnaround from the 0.9% reduction recorded in August last year.
Personal remittances, which include inflows in kind, rose 4.2% year-on-year to $2.875 billion in August, also slower than July’s 7.2% but still turning around from the 1.4% contraction recorded a year ago.
Sought for comment, UnionBank of the Philippines Inc. Chief Economist Ruben Carlo O. Asuncion noted that “July remittances were equally robust as the August print and September may also be positive.”
“Thus, three months of robust remittances growth will consequently bode well for domestic demand and consumption,” he said in an e-mail.
For Security Bank Corp. Chief Economist Robert Dan J. Roces, however, household consumption alone will be “hard-pressed” to drive overall economic growth amid “slowing capital formation and government spending.”
“Nonetheless, we see a sustained uptick in the coming months as the holiday season approaches and, thus, we maintain our full-year cash remittance forecast at $29.5 billion” compared to 2018’s $28.943-billion cash inflows.
The country’s GDP growth clocked in at dismal 5.5% in the second quarter against the government’s 6-7% target for full-year 2019, due largely to late enactment of the P3.662-trillion national budget that left new projects unfunded.
On a year-to-date basis, cash remittances rose by 3.9% to P19.908 billion as of August from P19.057 billion in last year’s comparative eight months, while personal remittances increased by 3.6% to P21.995 billion from P21.223 billion.
The same comparative eight months saw cash remittances from land-based and sea-based workers rising by 2.8% and 8.2% to $15.5 billion and $4.3 billion, respectively.
US remained the dominant source of OFW remittances with a 37% year-to-date share. The other main sources were Saudi Arabia, Singapore, United Arab Emirates, the United Kingdom, Japan, Canada, Hong Kong, Germany and Kuwait with a combined 78.4% share.