FILIPINOS working abroad are still expected to continue increasing their remittances this year despite the threat of recession in advanced countries like the United States.
On Wednesday, the Bangko Sentral ng Pilipinas (BSP) disclosed that cash remittances from Filipinos overseas grew 3.5 percent to $2.76 billion in January 2023.
Ateneo de Manila University Department of Economics Chairperson Alvin P. Ang told BusinessMirror that remittances sent by Filipinos to their families back home are expected to increase 3 to 5 percent this year.
“Remittances may be invisible because even the pandemic did not cause it to post a negative growth,” Ang told this newspaper on Wednesday. “I expect remittances to post a growth of around 3 to 5 percent this year.”
Unionbank Chief Economist Ruben Carlo O. Asuncion told BusinessMirror that their latest outlook showed that remittances could post a growth of 3 percent this year.
However, this is slightly lower than the 3.6-percent average growth in 2022.
Asuncion said remittance growth is expected to remain robust in the first semester of 2023 but the expected slowdown in growth in advanced countries is expected to weaken remittance growth in the second half of the year.
“[The] anticipated soft or hard landings for the developed and emerging markets [will] likely affect the forecast path; the dips in the current remittance trajectory, especially for July and October, reflect the global downturn’s impact on broad labor demand in 2H [second half] [and] could result in subdued remittance flows,” Asuncion told this newspaper.
In the policy note the Hexagon Perspective, Rizal Commercial Banking Corporation (RCBC) Chief Economist Michael L. Ricafort said the recession in the United States could slow down remittance growth.
This will also be driven by the slowdown in global trade and exports as well as investments or Foreign Direct Investments (FDIs), employment, and other business/economic activities.
Nonetheless, Ricafort said, remittances will continue increasing on a year-on-year basis because of the need of the families of Filipinos overseas to cope with rising domestic inflation.
“OFW remittances, still near record highs on a monthly basis, are considered a bright spot for the Philippine economy in terms of spurring/supporting consumer spending, which accounts for at least 75 percent of the economy, and in turn, support faster GDP/economic growth,” Ricafort said.
Based on data from the BSP, the expansion in cash remittances in January 2023 was due to the growth in receipts from land- and sea-based workers.
The growth in cash remittances from the United States, Saudi Arabia, Japan and Singapore contributed largely to the increase in remittances in January 2023.
In terms of country sources, the US posted the highest share of overall remittances during the said month, followed by Singapore, Japan, and Saudi Arabia.
For personal remittances, the BSP data showed overseas Filipinos sent $3.07 billion in January 2023, also 3.5 percent higher than the $2.97 billion recorded in the same month last year.
The increase in personal remittances in January 2023 was due to higher remittances sent by land-based workers with work contracts of one year or more and sea-and land-based workers with work contracts of less than one year.
Image credits: Nonie Reyes