Remittance growth slows in February

By Luz Wendy T. Noble, Reporter

MONEY sent home by overseas Filipino workers saw slower growth in February, as the coronavirus outbreak began to spread around the world.

Data from the central bank showed cash remittances of overseas Filipinos coursed through banks stood at to $2.358 billion in February, up 2.5% from the $2.301 billion seen a year ago. However, the annual growth rate seen in February is much slower than the 6.6% year-on-year expansion seen in January.

Inflows also fell 10.95% from the $2.648 billion recorded in January.

The February cash remittances were the lowest since the $2.372 billion logged in November 2019.

Cash remittances in the first two months of 2020 rose by 4.6% to $5.006 billion from the $4.784 billion recorded from January to February last year.

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said the remittance growth target has been cut to an average of 2% for this year.

“The BSP staff projects that the OFW remittances would shrink by 0.2 to 0.8% from the original three percent growth forecast, hence the revised forecast is a range of 2.2 to 2.8% or a midpoint of 2.5%,” Mr. Diokno said in a Viber message to reporters on Friday. “To be on the conservative side, BSP adopted an amended forecast of two percent, which is less than 2.5%.”

Meanwhile, personal remittances totalled $2.623 billion, up by 2.6% year-on-year from the $2.557 billion logged in February 2019.

However, personal remittances fell by 10.9% from the January level, and was slower compared to the 7.3% year-on-year pace in the previous month.

The United States was the biggest source of remittance in February, accounting for 39% of the total. This was followed by Singapore, Japan, Saudi Arabia, United Kingdom, United Arab Emirates, Qatar, Canada, Hong Kong, and Korea. These countries are the source of 79.4% of total cash remittances, the BSP said.

The central bank said personal remittances from land-based OFWs with contracts of more than a year jumped 3.5% to $2 billion from the $1.9 billion logged a year ago. Meanwhile, personal remittances from sea-based workers and land-based workers with work contracts of less than one year declined by 0.9% to $560 million from the $570 million traced a year ago.

For the January to February period, personal remittances grew by five percent to $5.566 billion from the $5.302 billion seen in the comparable year ago period.

BIGGER COVID IMPACT LOOMS
The slowing pace of remittance growth already reflects the impact of COVID-19 pandemic in some countries with many OFWs, according to Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp.

“There was already some slowdown in tourism- and travel-related industries worldwide in February amid travel advisories as lockdowns in China started after the Lunar New Year Holidays in the latter part of January,” he said in an e-mail.

Mr. Ricafort said remittance flows in March and in April may see much slower growth or even a contraction as more countries implemented lockdown measures that have affected many industries that employ OFWs.

In the first two months of the year, cash remittances from China totalled $4.518 million, which is just about 0.09% of the cumulative $5.006 billion logged during the period, according to Security Bank Corp. Chief Economist Robert Dan J. Roces.

Meanwhile, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said that COVID-related restrictions as of February were only imposed in countries that form a small part of the total OFW remittances.

“The expected decline may be felt when the full impact of COVID-19 health restrictions are factored in with much of the host countries of OFWs,” Mr. Asuncion said.

World Bank has projected remittance flows to fall by 13% in lower and middle-income countries as migrant workers face layoffs and lower wages amid the pandemic and the looming global recession.

BSP’s Mr. Diokno has said that around 20,000 to 30,000 OFWs have already been repatriated in the midst of the current situation.

“Remittances have proven resilient in past downturns. Yet while we all hope for a positive growth, remittances this time may contract year-on-year as the hospitality and cruise ship components being the hardest hit might pull down remittance levels,” Security Bank’s Mr. Roces said.

Among the hardest hit economies is the United States, the top remittance source of the Philippines. As of Thursday, COVID-19 cases in the US reached over 1.42 million, nearly a third of over 4.45 million cases around the world.

“Note that [many] Filipinos in the US are either doctors, nurses and are in other healthcare-related jobs. There are also Filipino teachers that may not be necessarily affected by any work stoppages for some other job types,” Mr. Asuncion said.

Amid tighter finances, RCBC’s Mr. Ricafort believes that some OFWs may continue to send money back home in the spirit of altruism.

“Some OFWs may still send money to the Philippines by tapping their savings for the meantime to tide them over during the lockdowns until the re-start of the economies in various host countries,” Mr. Ricafort said.

A drop in remittance will be significant as it boosts consumption, which accounts for about 70% of the country’s economy.