Remittances top forecast
MONEY sent home by overseas Filipino workers (OFWs) hit a record high in December, spurring the full-year tally beyond the central bank’s forecast, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.
Cash remittances totalled $2.559 billion in December, posting a fresh high as workers sent more funds to their families back home in time for the holidays. This is 3.6% higher than the $2.47 billion sent home a year ago, according to central bank data.
Funds from Filipinos based in the United States alone reached $864.068 million, accounting for a third of the monthly haul.
The December remittances pushed the full-year tally to a record $26.9 billion, jumping by five percent from 2015’s $25.607-billion haul. This pace is also the fastest since a 7.2% annualized increase posted in 2014, and beats the BSP’s forecast of a four percent climb for the year.
The central bank said the bigger amount of remittances was driven by a 7.6% rise in cash transfers from land-based OFWs, which offset a 3.8% decline in amounts sent home by seafarers amid “stiffer competition” in that industry.
Overall, Filipinos working abroad benefited from “improving global economic conditions,” the central bank said.
In particular, remittances from the Middle East grew by 12.7% from a year ago, led by inflows of $2.631 billion from Saudi Arabia and $2.156 billion from the United Arab Emirates.
World crude prices have been on the rise after the Organization of the Petroleum Exporting Countries agreed to cut production in order to arrest a supply glut late last year.
Remittances from the United States logged a 6.2% growth to $8.931 billion, accounting for a third of total remittances last year. Other top sources of inflows were Singapore ($1.657 billion), the United Kingdom ($1.424 billion), and Japan ($1.363 billion).
Sought for comment, an analyst said OFWs took advantage of the weaker peso.
“Depreciations of the Philippine peso… tend to translate into higher remittance growth. Recent depreciation of the peso suggests that OFWs were encouraged to send more to have more,” said Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines, Inc.
“This is not to mention that December remittance levels traditionally are higher because it is spending season.”
Looking ahead, Mr. Asuncion said he expects remittances to continue growing this year: “A steady increase in oil prices moving forward will definitely be favorable to growth of personal remittances and the favorable exchange rate movements will contribute to its increasing pace in 2017.”
The BSP expects a four percent growth in cash remittances from OFWs this year, as of its December review.
Personal remittances — which includes cash and in-kind transfers from OFWs to their families back home — were equivalent to 9.8% of gross domestic product (GDP) last year, the BSP said in a statement.
Such inflows and business process outsourcing revenues have constantly been cited as key drivers of domestic private consumption.
Philippine GDP expanded by 6.8% in 2016 — against the government’s 6-7% target for that year — on the back of an investment surge and robust consumer spending, cementing the country’s place among Asia’s fastestgrowing economies.