Remittances rebound in June
MONEY TRANSFERS to Jamaica are projected to have grown 14 per cent for the June quarter, reflecting a recovery from the initial onslaught of the pandemic, based on Bank of Jamaica, BOJ, preliminary estimates.
For the month of June alone, remittances were up 42 per cent, the central bank governor said last week.
The data validates the signs of resurgence in the remittances that the market leader had detected prior to the close of the quarter.
“When the Jamaican economy gets tough and people are out of work, then friends and family in the USA, London and Canada will send money home,” said Group CEO of GraceKennedy Limited Don Wehby. The conglomerate operates the Western Union franchise in Jamaica and the Caribbean.
Wehby noted that the same pattern was evident during the 2009 financial crisis where remittances increased after an initial fall. He said that while overseas workers are also losing jobs, they have access to government support and insurance to buffer the fallout, which allows them to continue sending money home.
Wehby had told the Financial Gleaner from back in June that he expected a rise in remittances going forward.
“We saw increased activity in May and June and I can confirm that our numbers are up 15 per cent, which is in line with the BOJ,” he said.
Jamaicans use remittances primarily for consumption to pay for living expense, which means the decline in money transfers is more likely to impact vulnerable groups.
Due to the crisis caused by the coronavirus, and the initial fall-off noted in remittances, money inflows were last projected to decline to US$1.9 billion this fiscal year, down from US$2.3 billion pre-COVID.
The BOJ estimate of the June quarter’s 14.1 per cent improvement was a footnote in its Quarterly Monetary
Policy Report, with no accompanying nominal figure. However, given that remittance inflows were US$603.2 million in the April-June 2019 period, the 2020 levels should amount to around US$688 million, if the estimate holds.
“The outlook for remittances continues to grow as we speak,”Wehby said.
BOJ reports monthly on remittances, but its most recent data is up to April, at which point the market was down 1.2 per cent, year on year, to US$748 million, after declines in inflows in March and April.
The bulk of the remittances are transacted via six remittance companies, led by Western Union.
“Our digital channel is growing significantly at over 300 per cent, year over year, as we are seeing a growth in our digital platform,” said Wehby, who added that in-store transactions still account for 90 per cent of business.
Digital transfers, which allows persons to send money from their homes, is “more convenient and hassle free”. Growth of this channel coincided with the rise of the coronavirus, and the social-distancing protocols implemented to contain its spread.