Remittance Inflows to the Philippines

May 4, 2023

Remittance Inflows to the Philippines

The number of cash inflows from overseas Filipino workers (OFWs) increased by 2.4 percent from February to April 2023 over the same period last year, reaching USD2.569 billion. Despite high prices and worries about a potential US recession, an economist is nevertheless upbeat about the direction of overseas Filipino workers (OFWs) remittances.

Data from the Bangko Sentral ng Pilipinas (BSP) released on Monday indicated that cash remittances increased by 2.4 percent year over year to USD2.569 billion in February of this year.

Even though February’s cash inflows were less than the previous month’s USD2.76 billion, Michael Ricafort, chief economist at Rizal Commercial Banking Corporation (RCBC), stated the most recent inflows are “still a good signal for the economy.”

The relatively higher costs, inflation, and cost of living in key host nations for OFWs, he suggested, may also be to blame for the slowdown in data on remittances to the Philippines. These factors have a significant negative impact on remittances to the Philippines.

According to Ricafort, one of the reasons for the reduced remittances in February last year was the peso’s depreciation versus the US currency. The US dollar’s greater conversion rate vs the Philippine peso, he continued, “also partly reduced the need to send more OFW remittances.”

Due to slower global trade/exports, investments/FDIs (foreign direct investments), and other business/economic activity, Ricafort claimed the possibility of recession for the greatest economy in the world may likely affect OFW remittances.

He also credited the faster recovery of OFW-host countries for the continued year-over-year increase in remittances. Remittances from OFWs are one of the domestic economy’s growth drivers since they increase consumer spending, which makes up at least 75% of the GDP.

As OFW families and dependents still have to deal with relatively higher prices and inflation locally, which would necessitate the sending of more remittances, as well as some normalization of spending by consumers/households for both essential and non-essential items as the economy reopened towards greater normalcy, he added, single-digit/modest growth in OFW remittances may continue in the coming months.