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12:50 pm on 18 October 2022, Tuesday
The central bank recorded a 4.4% increase in the money sent home by Overseas Filipinos in August 2022. From US$2.89 billion posted in the same month last year, remittances sent last August reached US$3.02 billion.
This means, in the first eight months of 2022, personal remittances rose by 3% to US$23.34 from the US$22.67 billion registered in the same months last 2021.
The Bangko Sentral ng Pilipinas cited the increased sources “was due to remittances sent by 1) land-based workers with work contracts of one year or more, and 2) sea- and land-based workers with work contracts of less than one year.”
Meanwhile, cash remittances coursed through banks grew by 4.3% to US$2.72 billion in August 2022 from US$2.61 billion recorded in August 2021.
The United States remains the top country source for cash remittance growth, followed by Saudi Arabia, Singapore, and Qatar.
RCBC Chief Economist Michael Ricafort says the single-digit growth in OFW remittances was attributed to the elevated US and global inflation.
“The modest single-digit growth in OFW remittances in recent months may be partly attributed to elevated US/global inflation and higher interest rates in recent months that somewhat slowed down/weighed on the recovery in the global economy and in both OFW employment and incomes,” Ricafort says.
The record-high US Dollar/Pesos Exchange rate was also a factor in the increase in remittances. Recently, it has reached a record high of P59:$1 from September-October 2022, significantly increasing the peso equivalent of OFW remittances.
Ricafort says the higher dollar value may be offset by the higher prices of goods and services in the Philippines, which is at its 4-year high of 6.9%.
“Thus, there may still be a need to send more OFW remittances due to higher prices/inflation, which erodes/offsets whatever foreign exchange gains due to the stronger US dollar vs. major global currencies,” Ricafort says.
Seasonally, OFW Remittances is expected to increase by the fourth quarter in preparation for the higher spending attributed to the holiday season.