Remittance growth expected to continue

The continued recovery of economies hosting overseas Filipino workers (OFWs) is expected to further support expansion of remittances, one of the strong pillars of domestic growth, according to a report by Philippine News Agency.

The Bangko Sentral ng Pilipinas (BSP) on Thursday reported the 2.3 percent year-on-year increase in personal remittances last July, bringing the year-to-date volume to USD20.33 billion, higher than the USD19.78 billion in the same period in 2021.

In a report, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said year-on-year growth of remittances last July is lower than the 2.5 percent expansion of inflows in the same period last year, but is the highest after the USD2.987 billion in December 2021.

Ricafort attributed the lower year-on-year expansion of the July figure partly to elevated inflation in most parts of the world, which also resulted in central banks’ decisions to increase their key rates.

These factors, he said, dampened global economic recovery as well as OFW employment and income.

“Going forward, any further recovery in OFW remittances in the coming months would also largely depend/be a function of the further/faster recovery of the economies of the major host countries around the world from Covid-19 (coronavirus disease 2019) lockdowns, in able for some OFWs to be able to work again, as well as the pace of restoring/regaining jobs lost by some adversely affected OFWs in the same or different industry/host country,” he added.

Ricafort said OFWs who are working in pandemic-hit industries, such as tourism and travel, are seen to regain their jobs given the resumption of operations of firms in these sectors, backed by governments’ bid towards her immunity.

He said continued diversification of deployment areas for OFWs is also a plus for the resiliency of remittances.

“Aging population in some developed countries also structurally increased the demand for OFWs in recent years, especially amid tighter labor markets in some host/developed countries due to better economic recovery prospects,” he added.