Remittance reach record high in 2022

Total inflows from overseas Filipino workers (OFWs) posted a fresh monthly record-high of $3.49 billion in December 2022, bringing the full-year figure to an all-time high of $36.14 billion, up by 3.6 percent, according to a report by Philippine News Agency.

Data released by the Bangko Sentral ng Pilipinas (BSP) on Wednesday showed that cash remittances last December registered an annual jump of 5.8 percent to USD3.16 billion, up from year-ago’s USD2.99 billion.

Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort expects further improvement in remittances, citing more opening and recovery of economies hosting OFWs.

He said these developments open more opportunities for job creation that benefits the OFWs, among others.

“OFW remittances at new record highs on a monthly basis, a bright spot for the Philippine economy in terms of spurring/supporting consumer spending, which accounts for at least 75 percent of the economy, and in turn, support faster GDP (gross domestic product)/economic growth,” he added.

Remittances account for around 9 percent of the country’s annual output for several decades now and these are among the structural sources of the country’s foreign reserves.

Ricafort said sustained rise of remittances as of last December “may be attributed to the relatively higher prices/inflation that may have required the sending of more remittances to cope up with higher prices of goods and services for OFWs and their families/dependents in the Philippines.”

The rate of domestic price increases posted a new 14-year high of 8.7 percent last December due largely to the faster rise in the housing, water, electricity, gas and other fuels index.

Amidst the growth in remittances, Ricafort said risks remain and among these include the possible recession in the United States, the economic impact of discovery of new and more contagious coronavirus disease 2019 (Covid-19) variants, as well as increased infection cases in China following its reopening in late 2022.

He said the elevated inflation in countries hosting OFWs “could potentially reduce OFWs’ disposable income and in turn, the amount of remittances sent to the Philippines.”

He added Russia’s invasion of Ukraine is another risk as could slow down global economic recovery prospects.