MONEY sent home by overseas Filipino workers (OFWs) recorded its slowest pace of growth in nearly five months in November due to lingering global uncertainties.
Cash remittances — which fuels household spending that contributes about 70% to national output — grew 2% to $2.372 billion in November from $2.326 billion in the same month in 2018, data released by the Bangko Sentral ng Pilipinas (BSP) on Wednesday showed.
This was the slowest year-on-year growth in monthly remittances since the 2.9% contraction seen in June 2019.
The month’s total also dropped by 11.19% from the October total of $2.671 billion — which was 8% higher than the year-ago level.
The November inflows brought the 11-month level to $27.231 billion, up by 4.4% compared to the $26.094 billion logged in January to November 2018.
The BSP targets a 3% growth in cash remittances in 2019. Money sent home by OFWs totaled $28.943 billion in 2018.
Meanwhile, personal remittances, which also keeps track of inflows in kind, also picked up by 2% year-on-year to $2.639 billion in November from $2.586 billion in the same month in 2018. On a year-to-date basis, these kinds of inflows grew 4.1% to $30.252 billion.
The BSP said cash remittances in the 11 months to November came mostly from the US, which comprised 37.7% of total flows during the period. Also among the top contributors were Saudi Arabia, Singapore, Japan, United Arab Emirates, the United Kingdom, Canada, Hong Kong, Germany and Qatar, which collectively made up 78.4% of cash inflows.
The central bank added that cash sent home by land-based workers from January to November inched up by 3.6% to $21.3 billion, while sea-based workers remitted $6 billion, up 7.3% year on year.
Sought for comment, Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort said the slower year-on-year growth and the month-on-month decline in cash remittances can be blamed on the weak global growth outlook.
“Slower growth…may have been partly weighed by the slower global economic outlook, largely brought about by the lingering US-China trade war since July 2018, and Brexit-related uncertainties that weighed on the economies of the UK, some Euro zone countries, and their biggest trading partners, as these may have adversely affected OFW demand or deployment,” Mr. Ricafort said in an e-mail.
He added that the continued unrest in Hong Kong which started in June last year may have also taken its toll on remittances coming from the special administrative region.
“The lingering protests in Hong Kong, whose economy contracted amid the slump in both foreign tourism business and retail sales, may have also adversely affected OFW employment prospects and OFW remittances from Hong Kong,” the economist said.
Mr. Ricafort noted that OFW remittances in October, which were partly backed by money sent for “tuition payments and finance some travels during breaks,” could be the reason behind the month-on-month decrease in remittances.
For his part, Security Bank Corp. Chief Economist Robert Dan J. Roces said in an e-mail that the year-on-year growth in remittances was likely due to “early inflows ahead of the Christmas season.”
He added that “despite concerns on the geopolitical front, remittances remained as strong as ever.”
ING Bank NV-Manila Senior Economist Nicholas Antonio T. Mapa for his part said he is positive the diverse deployment of OFWs will help cushion the effect of geopolitical issues on remittance flows.
“[T]he fact that Filipinos are everywhere helps mitigate these risks as even OF deployment is diversified. Thus, we can always expect OFWs to find a way to send remittances given that these funds represent more than a mere transfer of foreign currency,” Mr. Mapa said in an e-mail.
Meanwhile, RCBC’s Mr. Ricafort said he expects continued improvement in remittances this year on the back of brighter economic prospects.
Security Bank’s Mr. Roces added he is bullish that remittances will come in at around $30 billion at end-2019 as he expects about $2.8 billion worth of remittances to have come in on December due to the holidays. — Luz Wendy T. Noble