Remittances over the “ber” months totaled $2.74 billion, up from $2.6 billion from September to December 2020 and also higher than the amount sent home in September 2019. With the Philippine economy in full recession, the four-month increase is good, since remittances supplement weakening domestic incomes.
Meanwhile, the increased rate of remittances compared to the previous month (+9.3%) could be due to the impact of renewed lockdowns imposed by authorities in host countries as Covid-19 infections surged globally throughout the crisis. Remittances fell 0.9 percent in the first ten months of the year, totaling $24.6 billion, and are on course to outperform the Bangko Sentral ng Pilipinas’ (BSP) prediction of a 2% growth.
Overseas Filipino remittances from the Philippines
Female OFWs made up a bigger percentage of the population (56.0%) than male OFWs (44.0 percent ). The age group 30 to 34 years had the highest proportion of OFWs, accounting for 22.6 percent of all OFWs, followed by those aged 25 to 29 years, who accounted for 20.7 percent.
Furthermore, female OFWs were younger than male OFWs. Around 7% of female OFWs were between the ages of 15 and 24, and 46.9% were between the ages of 25 and 34, while the percentages of male OFWs in those age groups were 5.4 percent and 38.6%, respectively. In the age category of 40 and over, there were more male OFWs (38.1%) than female OFWs (27.0%).
Two out of every five OFWs (39.6%) worked in basic occupations. Service and sales workers made up about 18% of the workforce. Plant and machine operators and assemblers accounted for 12.2 percent of OFWs; technicians and associate professionals accounted for 8.7 percent; professionals accounted for 8.5 percent; and craft and allied trade workers accounted for 8.1 percent.
CALABARZON has the highest percentage of OFWs, accounting for 20.7 percent of all OFWs. Central Luzon, the National Capital Region, and Western Visayas accounted for 13.3%, 9.7%, and 9.0% of the total, respectively. The MIMAROPA Region, on the other hand, has the smallest share of OFWs at 1.5 percent.
Surprising remittance growth could be linked to the strength of the PHP
Most observers predicted a sharp reduction in migratory flows at the outset of the pandemic, as the pandemic prompted host countries to lock down, devastating global economic activity. Remittance flows fell 19.3% in May, but have since stabilized, with growth in four of the last five months.
Despite the expulsion of more than 300,000 OFs who were sent home due to employment losses in their host countries, remittances grew. The astonishing endurance of remittances in the face of the epidemic can be attributed to the PHP’s current 5.5 percent appreciation tendency. OFWs may have been obliged to adjust for the dollar’s relative weakness against the PHP through money sent home larger remittances in dollar terms in order to meet their families’ domestic spending demands in the Philippines.
With global lockdowns reinstalled in reaction to the new increase in Covid-19 infections, we should expect only modest growth in remittance flows for the rest of the year. The continued strength of advantages of PHP will put pressure on OFs to send home more dollars, but physical constraints and work stoppages may limit the possible increase in remittance flows from January 2021 to March 2021 If the quarantine level for the entire country is tightened.
The unexpected increase in Philippine remittance flows supports our forecast for short-term peso appreciation, and the steady inflows may also help keep consumer momentum going into the final quarter of 2020.
In the year 2020, the top source of cash remittance from September to December
The top source of cash remittances was Filipino workers in the United States, followed by those in Singapore, Saudi Arabia, Japan, the United Kingdom, the United Arab Emirates, Canada, Malaysia, Taiwan, South Korea and Qatar. During the four-month period, remittances from these nations accounted for 78.3 percent of total inflows.
The increase in cash remittances was linked to php code inflows from the United States, Malaysia, and Singapore, according to the central bank. Personal remittances, which include in-kind transfers, increased 5.3 percent to $2.761 billion from $2.623 billion the previous year. Personal remittance inflows totaled $5.655 billion in the fourth quarter, up 1.6 percent over the previous quarter.
Mr. Asuncion of UnionBank is bullish about remittances, citing evidence of economic recovery in some host nations.
“This outlook is still based on a stronger than expected US economic rebound this year, as well as an increase in global growth projections from the IMF (International Monetary Fund).” Furthermore, the modest but steady rebound in oil prices may continue to support the economic recovery of Middle Eastern economies, which host a substantial number of Filipino abroad workers,” he added.
Personal Advancement for the Year 2021
In prediction of a vaccine powered rebound by the second half of 2021, the IMF expects the global economy to grow by 6% this year, substantially faster than its earlier forecast of 5.5 percent. Mr. Mapa, on the other hand, warned of the dangers posed by the return of restrictions in some nations where COVID-19 instances are on the rise.
“However, considering the considerable decrease in the stock of OFWs owing to expulsion and the recent shutdowns experienced in certain nations throughout the world, upside gains for remittances may be limited,” he said.
Mr. Mapa is still counting on remittance inflows to keep the peso strong, even if they may have a minor influence on spending. According to data from the Bankers Association of the Philippines, the peso finished at P48.51 per dollar in mid-December, down 48.7 centavos or 1.01 percent from its closing of P48.023 on Dec. 29, the final trading day of 2020.