Cash remittances from overseas Filipino workers (OFW) increased in February, albeit at their slowest pace in 13 months, reflecting the impact of the resurgence of coronavirus disease 2019 (COVID-19) infections in many countries.
Bangko Sentral ng Pilipinas (BSP) data released on Monday showed cash remittances rose 1.3% to $2.509 billion in February from $2.476 billion a year earlier.
This is the smallest monthly inflow in three months or since transporting $2.502 billion in November.
Growth in remittances in February was the slowest since the 1.7% decline seen in January 2021.
“Growth of personal remittances in February 2022 was, however, slower compared to January at 2.5% partly due to the reimposition of restrictions in host countries OF (Overseas Filipinos) and in the Philippines amid a resurgence in COVID cases across the globe,” the PASB said.
In February, remittances sent by land workers rose 1.2% to $2.007 billion, while those sent by sea workers rose 1.6% to $501 million.
“(February remittances data) has yet to capture the impact of the invasion of Ukraine which could impact remittances from Europe and host countries close to the EU. ‘Ukraine and Russia,’ said chief economist of UnionBank of the Philippines, Inc. Ruben Carlo O. Asuncion.
Russia began its invasion of Ukraine on February 24.
However, Asuncion said the protracted war between Russia and Ukraine could dampen the growth of remittances, especially for OFWs in some European countries.
The central bank said Russia and Ukraine have a minimal contribution to total remittances.Ioops. However, he warned that a war that involves Europe and Western countries like the United States, which are major sources of remittances, could have a bigger impact on inflows.
ING Bank-NV Manila chief economist Nicholas Antonio T. Mapa said the slowdown in remittance growth in February was also likely due to the depreciation of the peso against the greenback.
“A weaker peso allows OFWs to send home a smaller amount of dollars to cover peso expenses. In an environment of weakening local currency and (largely) IfWith fixed expenditures in pesos, there will be less pressure on OFWs to send home more funds in dollars,” Mr. Mapa said.
“For example, now that the peso is at P52 per dollar, if an OFW needs to send home enough dollars to pay the school fees of P50,000, they need to send fewer dollars to pay the school fees ( $961). Unlike last year when the peso was at P48, OFW has to send $1,042,” he added.
With the continued depreciation of the peso against the US dollar, Mapa said remittances inFthe dips will offset the widening of the trade gap.
The money sent home by Filipino migrants in the Iffirst two months of 2022 was $5.177 billion, up 1.9% from $5.078 billion in the same period of 2021.
The expansion of remittances during the period from January to February is mainly explained byFbottom of the United States, Japan and Singapore.
For the January to February period, the United States, Singapore, Saudi Arabia, Japan, United Kingdom, United Arab Emirates, Canada, Taiwan, Qatar and Malaysia were the top 10 sources of remittances. These countries accounted for 79.6% of theFlow.
Meanwhile, personal remittances, which include inFin-kind, edged up 1.2% to $2.793 billion in February. This pushed personal remittances up 1.9% to $5.759 billion during the Iffirst two months of 2022.
UnionBank’s Mr Asuncion said OFWs are likely to lead to increased household spending over the coming months as the economy continues to reopen.
“It is possible that OFWs are already thinking about the costs of returning to school right now, particularly that face-to-face schooling may soon be restored,” Mr Asuncion said.
PASB expects remittances to increase by 4% this year. — LWT Noble