REMITTANCES from overseas Filipino workers (OFWs) grew slower in April from the previous month due to a “cyclical” drop in expenses.
Cash remittances grew by 4% to $2.441 billion in April from the $2.3 billion posted in the same month last year, the Bangko Sentral ng Pilipinas (BSP) reported on Monday.
Despite the year-on-year climb, the growth in money sent home by Filipinos abroad in April was slower than the 6.6% surge seen in March, which was due to a low base from a year earlier when the Philippine government imposed an employment ban to Kuwait.
The central bank attributed April’s increase to the 2.2% growth in remittances from land-based workers to $1.8 billion. Money sent home by sea-based workers also rose 10.6% to $600 million during the month.
April’s haul brought the four-month cash remittances tally to $9.739 billion, 4.1% higher than the $9.353 billion recorded in the same period last year.
The central bank said bulk of the remittances came from United States, which had a 35.9% share in the January to April total. This was followed by Saudi Arabia, Singapore, United Arab Emirates, United Kingdom, Japan, Canada, Hong Kong, Qatar and Germany, which had a combined share of 78% of total cash remittances for first four months.
Meanwhile, personal remittances rose 3.7% to $2.713 billion in April from $2.616 billion in the same month in 2018.
In the first four months, 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 $10.811 billion from $10.426 billion the previous year.
Robert Dan J. Roces, Security Bank Corp. chief economist, attributed the tepid growth in April remittances to slower spending during the month.
“We attribute this to the cyclical nature of our remittances. April months usually have lower values compared with previous months as the post-graduation expenses of most households are done,” Mr. Roces said in an e-mail.
“Having said that, the year-on-year growth is proof-positive that overseas Filipino remittance flows continue to be a main contributor to household consumption as it maintains growth at a healthy pace. The steady stream of dollars continue to fund the peso’s purchasing power and assures household consumption, and together with BPO (business process outsourcing) flows, helps augment the continuing struggles of our export sector,” Mr. Roces added.
Meanwhile, UnionBank of the Philippines, Inc. chief economist Ruben Carlo O. Asuncion said the growth was driven by “seasonal major needs” of OFW families.
“Note that some OFWs may have also timed their respective vacation from work to be with their families during the summer,” he said.
Michael L. Ricafort, head of the economics research division of Rizal Commercial Banking Corp., said the year-on-year growth on remittances is “still decent.”
“It’s slightly better. Because of the easing inflation, the dollar has been fairly stable… When inflation is high, they need to convert more,” Mr. Ricafort added.
Inflation accelerated in May following six consecutive months of slowdown, the Philippine Statistics Authority reported earlier this month.
Headline inflation stood at 3.2% last month, up from three percent in April but still slower than the 4.6% recorded in May 2018.
Year-to-date, inflation averaged at 3.6%, past the midpoint of the BSP’s 2-4% target range and still above the 2.9% forecast for the year.
The central bank sees cash remittances growing by three percent this year.
In 2018, remittances grew 3.1% to $28.943 billion from 2017’s $28.060 billion, a little past the BSP’s three-percent growth projection. — R.J.N. Ignacio