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Economic recovery of more countries globally is expected to further ensure the sustained growth of remittances to the Philippines which can benefit the peso, according to a report by Philippine News Agency.
Data released by the Bangko Sentral ng Pilipinas (BSP) on Thursday showed that cash inflows from overseas Filipino workers (OFWs) grew by 5.1 percent year-on-year last February to USD2.48 billion, a reversal from the 1.7-percent decline in the previous month.
In a report, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said that although around 500,000 OFWs have been repatriated since the pandemic started last year, demand for OFWs in the medical sector and other essential industries remains.
He said since more economies continue to reopen, this provides additional opportunities for OFWs and their ability to send more remittances.
He added the recovery of remittances “could be aided by the expedited deployment/rollout of more Covid-19 vaccines into 2021.”
ING Bank Manila senior economist Nicholas Mapa said expansion of remittances in the second month this year surpassed expectations for about 2 percent year-on-year jump.
He expects further expansion in the coming months as global trade also improves.
“Upside gains for remittances, however, may be limited given the substantial drawdown in the stock of OFs (overseas Filipinos) due to repatriation and the recent shutdowns experienced in select countries around the world,” he said.
Meanwhile, Mapa forecasts growth of remittances to help buoy the Philippine peso in the near term “especially with the economic recession weighing on corporate demand for the dollar.”
“With firms and households cutting back on expansion plans, inbound shipments of capital goods and durables has been less stellar than prior to the pandemic, helping the Philippines post a current account surplus in 2020,” he said.
For this year, Mapa projects remittances “to adequately cover the more modest trade deficit, a development that should help lend appreciation pressure to the PHP (Philippine peso) in the near term.”
“However, despite the boost to the currency, the impact of remittances on domestic consumption will likely be muted with the PHP-equivalent of remittances actually down 3.6 percent for the year,” he added.