DESPITE opening the year with a decline in the overall volume of cash remittances sent to the Philippines, Filipino migrant workers are still expected to pull through this year and send more money back home this year compared to last.
In a recent economic bulletin released by Rizal Commercial Banking Corporation (RCBC), Michael Ricafort said the performance of remittances, despite the 1.7-percent decline in January, is still a good indicator of growth in 2021.
Ricafort said the decline largely came from temporary causes such as seasonality after the remittance surge in the holiday seasons and the renewed spike in Covid cases towards the end of 2020.
“The renewed spike in new Covid-19 cases since the latter part of 2020, especially with the new coronavirus strains/variants that are more contagious, as well as any delay in the rollout of Covid-19 vaccines in some of the major host countries for OFWs could have slowed down economic recovery prospects and OFW remittances data; as manifested by some restrictions in some OFW host countries, thereby fundamentally partly creating a soft patch on OFW remittances,” Ricafort said.
Despite this, the economist still believes remittances will pull through and enter growth territory in 2021.
Among the possible drivers for this is the low base in 2020 and the progress in vaccination in some host economies.
“OFW remittances would start from a negative base from March-June 2021, thereby could mathematically result in a relatively larger positive year-on-year growth starting March 2021,” Ricafort said.
“For the coming months, an important positive offsetting factor is the increased development and deployment/rollout of vaccines for Covid-19 in many countries worldwide into 2021, especially in major host countries of OFWs, thereby could help reduce new coronavirus cases and further improve economic recovery prospects that lead to more jobs/employment opportunities for OFWs than otherwise, resulting to improvement in OFW remittances data,” he added.
Earlier, the Bangko Sentral ng Pilipinas (BSP) reported a 1.7-percent decline in cash remittances to hit $2.603 billion in January.
The January remittance level is also $287 million lower than the $2.89-billion level of remittances in December of 2020.
Broken down, the decline in cash remittances can be traced to the lower land-based workers’ remittances which contracted by 2.4 percent to hit $2.044 billion during the month. Sea-based workers, meanwhile, slightly cushioned the blow to marginally increase by 1 percent to hit $558 million.
By country source, the United States registered the highest share to total remittances at 40.9 percent. This is followed by remittances from Singapore, Saudi Arabia, Japan, the United Kingdom, Canada, United Arab Emirates, Qatar, Malaysia, and Taiwan.
Image credits: Bernard Testa
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