CASH remittances from overseas Filipinos only reached $2.644 billion in November 2022, the lowest in five months, according to data released by the Bangko Sentral ng Pilipinas (BSP).
Data from the BSP showed this was the lowest since May 2022 when remittances reached $2.425 billion.
Rizal Commercial Banking Corporation (RCBC) Chief Economist Michael L. Ricafort said this may be due to the peso-dollar exchange rate as well as high inflation in many host countries.
“The slowdown may have to do with the relatively higher US dollar/peso exchange rate compared to early 2022,” Ricafort said in the Hexagon Perspective.
“Furthermore, higher prices/inflation also in host countries of OFWs could have also increased the cost of living of OFWs abroad, thereby partly reducing the amount sent to the country,” he added. The country’s low remittance inflow may continue as headwinds such as the Russia-Ukraine war and the expected recession this year may slow deployment, thus reducing remittances.
Institute for Migration and Development Issues (IMDI) Executive Director Jeremaiah M. Opiniano said this is among the concerns surrounding 2023.
He said labor markets abroad are not yet fully open for foreign workers and may take some more time to get back to prepandemic international migration trends.
Opiniano added that this, along with the rising cost of living in host countries, could also lead to reduced OFW remittances moving forward.
“In the prepandemic era, remittances were said to be ‘countercyclical’. This metaphor means that even if countries experience economic recessions, remittance volumes will still rise,” Opiniano said in an email to BusinessMirror.
“[But] the worry is 2023. I think if countries sending out and receiving international migrants and remittances all endure these global inflation rates challenges, the countercyclicality insight for remittances may be debunked,” he added.
This insight is similar to the risks identified by Ricafort. He said risks/headwinds include higher prices/inflation in host countries for OFWs that could potentially reduce OFWs’ disposable income and the amount of remittances sent to the Philippines.
Ricafort said the headwinds include the risk of US recession that could slow down US/global economic growth/recovery, global trade/exports, investments/FDIs, remittances, jobs/employment worldwide, including some OFW jobs.
“OFW remittances and conversion to pesos are expected to seasonally increase towards the end of 2022 in view of the seasonal increase in holiday spending that could increase further amid no more restrictions recently,” Ricafort, however, said.
The BSP data showed cash remittance, on a year-on-year basis, posted a growth of 5.7 percent over the $2.5 billion posted in the same month in 2021.
On a year-to-date basis, cash remittances coursed through banks in January-November 2022 amounted to $29.38 billion, 3.3 percent higher than the year-ago level of $28.43 billion.
BSP data showed the growth in cash remittances from the United States (US), Saudi Arabia, Singapore, and Qatar contributed largely to the increase in remittances in January-November 2022.
Meanwhile, in terms of country sources, the US posted the highest share of overall remittances in the first 11 months of 2022, followed by Singapore and Saudi Arabia.