June remittances smallest in 9 months

By Mark T. AmoguisSenior Researcher
MONEY SENT HOME by Filipino workers abroad slipped for the first time in 10 months and marked the worst performance in a year, according to data the central bank released on Thursday.
Cash remittance from overseas Filipino workers (OFW) dropped by 2.9% to $2.29 billion in June from $2.357 billion a year ago and by 12% from May’s $2.609 billion, data from the Bangko Sentral ng Pilipinas (BSP) showed.
It was these flows worst performance since June 2018’s 4.5% contraction.
June inflows were also the smallest in nine months, or since September 2018’s $2.237 billion.
The central bank traced this to “the 5.4% year-on-year drop in cash remittances from land-based workers, which was mitigated by the 6.3% increase year-on-year in transfers from sea-based workers.”
Saudi Arabia and Qatar contributed to the decline seen for that month, the BSP said in a statement.
This brought the cash inflows last semester to $14.638 billion, up 3.2% from $14.179 billion in last year’s first half.
Similarly, personal remittances, which include transfers in kind, fell 2.7% to $2.545 billion in June from $2.615 billion a year ago and from $2.896 billion in May.
It was also the first drop in 10 months and the worst performance since June 2018’s 4.9% drop as well.
June personal remittances were also the smallest in nine months, or since September 2018’s $2.49 billion.
June’s tally brought personal remittances to $16.252 billion last semester, an increase of 2.9% from last year’s first half.
According to the BSP, the United States was the biggest source of OFW remittances in the first half. It was followed by Saudi Arabia, Singapore, United Arab Emirates, the United Kingdom, Japan, Canada, Hong Kong, Germany, and Qatar. These countries accounted for 78% of total cash remittances last semester, the central bank said.
The central bank sees personal and cash remittances growing by three percent this year.
Sought for comment, ING Bank N.V. Manila Branch senior economist Nicholas Antonio T. Mapa said that the drop in June “was to be expected” given seasonality.
“We’ve noted increased volatility in remittance flows over the past the years and this could be due to the fact that OFs (overseas Filipinos) may be getting their salaries delayed from time to time,” Mr. Mapa said in an e-mail.
“We’ve also noted nuances in exchange rates for the increased swings in dollar terms.”
On the other hand, UnionBank of the Philippines, Inc.’s Economic Research Unit forecast a stronger June remittance data, its economist said.
Ruben Carlo O. Asuncion, UnionBank’s chief economist, said in a separate e-mail that May was “the preferred month for remittance to afford the OFW families’ tuition fees and other school-related needs” ahead of start of the school year in June.
UnionBank’s Mr. Asuncion expects OFW remittances to grow this year, but “at a slower-than-expected rate.”
“This potential growth is despite global headwinds that may impact remittances level in the short and medium term.”
ING’s Mr. Mapa said that in the coming months, “we can expect increased flows of remittances as the ‘ber’ months show favorable seasonality…,” referring to the last four months of the year which Filipinos treat as Christmas season.
“We’ve noted that on an annual basis, OF remittances continue to chug along at a consistent 3-4% pace, bringing in a steady substantial flow of FX and sustaining peso purchasing power in turn,” he added.