CASH REMITTANCES are expected to grow faster this year as overseas Filipino workers (OFWs) will likely take advantage of a weaker peso to send more funds to their families back home, analysts at a global bank said, even as they flagged risks from a deployment ban to Kuwait.
HSBC Global Research said remittances likely grew by 5.1% in January from a year ago, although slower than the 7.1% year-on-year increment posted in December last year.
The Bangko Sentral ng Pilipinas (BSP) will report remittance data on Thursday.
Money sent home by OFWs reached $28.06 billion last year, 4.3% more than the $26.9 billion remitted in 2016. This, however, was slower than the five percent growth posted in 2016.
The growth will be supported by sustained flows from OFWs, now that their dollars are worth more when converted to peso.
“We anticipate remittances to rebound in 2018, growing back to its recent trend of around five percent, as overseas Filipino workers take advantage of the weak peso, but downside risks persist given the Duterte administration’s proposal to ban OFWs from going to Kuwait due to recent abuse and maltreatment cases,” HSBC said in a report published yesterday.
Remittances fuel domestic consumption, which in turn fuels much of overall economic growth. The Philippine economy expanded by 6.7% in 2017 against a 6.6-7.5% government target, though it was still slower than 2016’s 6.9%.
The peso has averaged P51.1471 per dollar for the first two months of the year, with the local unit touching near 12-year lows in February.
The central bank expects remittances to grow by another four percent this year to more than $29 billion.
While HSBC Global Research believes the pace will pick up faster than the BSP forecast, it flagged possible negative impact of President Rodrigo R. Duterte’s ban on OFW deployment to Kuwait, following the murder of domestic helper Joanna D. Demafelis, whose body was found last month stuffed in a freezer in an abandoned apartment. The ban covers all OFWs, including those in white-collar jobs.
BSP Deputy Governor Diwa C. Guinigundo said monetary authorities are still studying how the government ban on OFW deployment to Kuwait could affect remittance flows.
“Filipinos are very, very resilient. They don’t have to go back, they will surely find alternative employment. We continue to study the impact of prospective policy of the government,” Mr. Guinigundo told reporters.
Remittances from Filipinos based in the Middle East grew by 3.4% last year despite tensions in the Gulf area, led by the United Arab Emirates and Saudi Arabia.
Money sent by OFWs in Kuwait totalled $71.249 million, just 2.6% of the total according to central bank data. — Melissa Luz T. Lopez