Cash remittances, a key economic support, off to strong start

MONEY SENT HOME by Filipinos working abroad grew at the fastest clip in three months as this year began, even as the latest amount was less than December’s record-high inflows, according to data the central bank released on Friday.
Cash remittances increased by 4.4% to $2.484 billion in January from the year-ago $2.379 billion, even as the latest inflows were 12.8% less than December’s all-time-high $2.849 billion.
“This growth was in line with the increase in remittances from both land-based and sea-based workers”, who sent 2.3% and 12.7% more at $1.95 billion and $530 million, respectively, in January, the central bank said in a statement.
Personal remittances, which include transfers in kind other than cash, grew 3.4% to $2.745 billion in January from $2.655 billion a year ago, even though the latest inflows were 13.05% less than December’s $3.157 billion.
The latest growth rates of both personal and cash remittances, however, were slower than the 10.8% and 9.7%, respectively, clocked in January last year. Capital Economics in a note on Thursday attributed slowing remittance growth to an improving Philippine economy that has generated more jobs and an economic downturn in the Middle East that accounts for about a third of remittances.
Sought for comment, Ruben Carlo O. Asuncion, chief economist of Union Bank of the Philippines, Inc., said in an e-mail that UnionBank’s Economic Research Unit (ERU) expected January inflows to have logged three-percent growth.
“This January number is actually higher-than-expected. ERU thinks that remittances growth will hover over this 3.0% this 2019. This is lower than the previous two years of 4-5% average,” Mr. Asuncion wrote.
“The expected decline may actually mean positive. This means that more Filipinos have opportunities here domestically and probably choose to stay here in the country. owever, it can also mean that opportunities abroad have been declining as well, particularly in the Middle East.”
For Security Bank Corp. economist Robert Dan J. Roces, remittances’ year-on-year growth was “driven primarily by the higher-than-anticipated growth in contributions from the sea-based components of OF workers”.
“We’ve been observing the growing importance of this sector since last quarter,” Mr. Roces said via e-mail when asked for comment, adding that “[t]he growth also signals stronger domestic demand and that consumption is back, probably coming off of the slowdown we experienced last year due to high inflation”.
At the same time, the month-on-month “decline is your usual tapering coming from the peak remittance season” towards Christmas, Mr. Roces said.
By country source, the United States accounted for the biggest share of overall remittances at 35.5%. It was followed by Saudi Arabia, Singapore, United Kingdom, United Arab Emirates, Japan, Canada, Qatar, Hong Kong and Kuwait, the central bank reported. Combined remittances from these countries accounted for almost 78% of total cash remittances.
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.
Remittances from abroad fuel household spending, which in turn has long been a key driver of overall economic expansion, which the government projects to steady to 6-7% this year from 6.2% in 2018 and 6.7% in 2017. — with KANV