MONEY sent home by overseas Filipino workers (OFWs) in November grew by its slowest pace in three months, with cash remittances reaching its lowest level since May as lockdowns were reimposed in some countries due to a spike in coronavirus cases.
Data from the Bangko Sentral ng Pilipinas (BSP) released Thursday showed cash remittances coursed through banks edged up 0.3% to $2.379 billion in November from $2.372 billion a year earlier.
This marked the third consecutive month of growth, albeit the slowest print since the 4.1% contraction in August. Cash remittances were also at its lowest since the $2.106-billion level in May.
On the other hand, cash remittances dropped 13.4% from the $2.747-billion level in October.
“Month-on-month easing [in remittance flows] could be due to new lockdown measures imposed in the host countries, necessitating some need to create fund reserves on the part of the sender and thus some pullback in money being sent home,” Security Bank Corp. Chief Economist Robert Dan J. Roces said in a Viber message.
Some European countries including the United Kingdom and Germany reimposed lockdowns in November to curb a surge in coronavirus disease 2019 (COVID-19) cases.
In November, cash remittances from land-based OFWs rose 0.5% to $1.852 billion, while inflows from sea-based workers slipped 0.2% to $527.3 million.
Meanwhile, cash remittances for the 11 months to November dropped 0.8% to $27.013 billion from $27.231 billion a year earlier. The decline is below than the BSP’s projection of a 2% contraction for the full year.
This was due to lower inflows from Saudi Arabia, Japan, the United Kingdom (UK), the United Arab Emirates (UAE), Germany, and Kuwait, the BSP said.
In the first 11 months of 2020, the United States was the biggest remittance source with a 40.1% share. Inflows from the United States, Singapore, Saudi Arabia, Japan, the United Kingdom, the United Arab Emirates, Canada, Hong Kong, Qatar, and Korea cumulatively made up 78.6% of the total cash remittance.
Meanwhile, personal remittances, which include inflows in kind, inched up by 0.1% to $2.643 billion in November from $2.639 billion a year earlier. This brought the year-to-date level to $29.988 billion, down by 0.9% against the $30.252 billion logged in the January to November 2019 period.
BSP Governor Benjamin E. Diokno is bullish on the growth of remittances in the coming years, as more Filipino professionals are expected to land jobs abroad.
“So we expect that as we send more Filipinos abroad, hopefully we change the nature or the composition of OFWs, maybe more nurses, doctors, IT workers, etc. Then, there will be higher OFW remittances in the years to come,” he said at BusinessWorld One-on-One held on Wednesday.
Remittances are likely to recover in 2021 amid improving global conditions. The central bank expects cash remittances to grow by 4% this year.
“Remittances this year are expected to be higher, notably those coming from the US which is the largest source, as larger stimulus measures are expected from the [US President Joseph R.] Biden administration,” Mr. Roces said, adding reopening of host countries and vaccine rollouts could drive growth.
Remittance support is crucial as the Philippine economy remained in a recession, said ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa.
“Steady remittances coupled with implosion of import demand, lending support to the peso amidst the weak global dollar narrative,” Mr. Mapa said in a note.
The peso has been hovering around the P48-per-dollar level in recent weeks.