OFW remittances hit all-time high in 2021
Dollars sent home by expatriate Filipinos hit an all-time high last year with the redeployment of Filipino contract workers who were earlier displaced by the impact of the pandemic, according to Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno.
He said personal remittances went up by 5.1 percent to a record high of $34.88 billion in 2021 from $33.19 billion in 2020, exceeding the previous all-time high of $33.47 billion in 2019 or prior to the COVID outbreak.
The recent growth rate, however, was slightly lower than the six percent growth target of the BSP.
Diokno said the sustained growth in personal remittances was driven by the remittances sent by land-based workers with work contracts of one year or more, which went up by 5.6 percent to $27 billion last year from $25.56 billion a year ago.
Likewise, Diokno said remittances from sea- and land-based workers with work contracts of less than one year also grew by 2.9 percent to $7.14 billion in 2021 from $6.93 billion in 2020.
“The growth in personal remittances reflected a pickup in OFW deployment, strong demand for OFWs amid the reopening of host economies to foreign workers, and the continued shift to digital support that facilitated inward transfer of remittances,” Diokno said.
In turn, the BSP chief said the strong inward remittances contributed to the increase in domestic demand, with the 2021 level accounting for 8.9 percent and 8.5 percent of the country’s gross domestic product (GDP) and gross national income (GNI), respectively.
For December alone, the BSP chief said personal remittances, which include all current transfers in cash or in kind by OFWs, as well as other household-to-household transfers between Filipinos who have migrated abroad and their families in the Philippines, increased by 2.9 percent to
hit a monthly record high of $3.3 billion from $3.2 billion in December 2020 due to the Christmas and New Year holidays.
On the other hand, Diokno said cash remittances also increased by 5.1 percent to an all-time high of $31.42 billion in 2021 from $29.9 billion in 2020.
According to the BSP, the growth was supported by the increase in receipts from land-based workers, which rose by 5.6 percent to $24.87 billion from $23.55 billion, and from sea-based workers, which inched up by three percent to $6.54 billion from $6.35 billion.
“Notwithstanding the global pandemic, cash remittances sent by overseas Filipinos across various regions remained robust,” Diokno said.
Data from the central bank showed inward remittances from the Americas increased by 7.1 percent, followed by Europe ( 5.5 percent), Asia ( 4.5 percent), and the Middle East (0.7 percent) .
The US remained the major source of cash remittances, cornering a share of 40.5 percent, followed by Singapore, Saudi Arabia, Japan, the United Kingdom, the United Arab Emirates, Canada, Taiwan, Qatar and South Korea.
According to the BSP, the combined remittances from the top 10 countries represented 78.9 percent of total cash remittances last year.
For December alone, cash remittances coursed through banks went up by 3.3 percent to hit a monthly record high of $2.99 billion from $2.89 billion in the same month in 2020.
For this year, the BSP sees the rise in OFW remittances stabilizing at four percent from six percent last year.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the further re-opening and recovery of many economies worldwide, especially OFW host countries and developed countries led to more OFW employment, which in turn supported the recent growth in remittances.
“OFW remittances could improve further in the coming months, supporting the country’s economic recovery prospects from COVID,” Ricafort said.
According to Ricafort, the continued year-on-year growth in OFW remittances has been somewhat defying the pandemic, as some OFWs are economic and medical frontliners, as well as essential workers in various host countries worldwide.