By Reicelene Joy N. Ignacio
MONEY SENT HOME through banks by Overseas Filipino Workers (OFWs) — which fuels household spending that, in turn, contributes nearly 70% to gross domestic product — grew in February, according to data the central bank released on Monday, but at the slowest pace in six months due to what one analyst said was muted business confidence in the face of global uncertainties.
Data from the Bangko Sentral ng Pilipinas (BSP) showed cash remittances from OFWs grew by mere 1.5% to $2.301 billion in February from the $2.267 billion a year ago, marking the smallest increment since August 2018’s 0.9% dip. February growth was also slower than the year-ago 4.5% increase.
That brought year-to-date cash inflows to $4.784 billion, three percent more than the $4.647 billion recorded in 2018’s first two months that recorded a bigger 7.1% increase.
“This growth was supported by the increase in remittances from both land-based ($3.73 billion) and sea-based ($1.06 billion) workers, which rose by one percent and 10.5%, respectively,” the BSP explained in a statement.
Personal remittances — which include transfers in kind — similarly edged up by a six-month-low 1.2% to $2.557 billion in February from $2.528 billion a year ago, fueling a 2.3% rise in year-to-date inflows to $5.302 billion from $5.182 billion.
The United States was the biggest source of overall remittances in the first two months, accounting for 35.5%, followed by Saudi Arabia, Singapore, United Kingdom, United Arab Emirates, Japan, Canada, Qatar, Hong Kong and Germany, the central bank reported. “The combined remittances from these countries accounted for 77.3% of total cash remittances for January to February 2019,” the central bank said in its statement.
“The relative slow growth in OFW remittances in February 2019 may fundamentally have been largely bought about by the slower global economic growth outlook amid the lingering US-China trade war and uncertainties related to Brexit that also slowed down the economies of the United Kingdom, European Union and their major trading partners around the world,” Michael L. Ricafort, economist at Rizal Commercial Banking Corp., said in a mobile phone message when asked for comment on the latest remittance data.
“These external developments slowed down global trade as well as lowered manufacturing and services activities in the world’s biggest economies, thereby could have resulted in lower demand for OFWs.”
Sought separately for comment, Ruben Carlo O. Asuncion, chief economist of the Union Bank of the Philippines, Inc., said that February’s increase could be attributed to upcoming student graduation. “… [T]his is before graduation month for the country. This increase may have been due to consumption reasons, probably, celebrations and reunions,” Mr. Asuncion said.
At the same time, he said that February’s growth was slower than the 3.6% increase expected by the UnionBank Economic Research Unit.
For Nicholas Antonio T. Mapa, senior economist of ING Bank NV-Manila, “overseas Filipino remittance flows continue to chug along at a healthy pace…”
“The steady stream of dollars help fund peso purchasing power, almost assuring that household consumption continues, while also augmenting the sustained struggles of the export sector,” Mr. Mapa said.
Cash remittances increased by 3.1% — marking the slowest annual increase on record — to $28.943 billion last year from 2017’s $28.06 billion, a little past the central bank’s three-percent growth projection for 2018.
The central bank projects these inflows to sustain three percent growth this year.