Remittances drop to two-month low in August

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(FILE PHOTO)

Metro Manila (CNN Philippines, October 15) — Remittances from Filipinos abroad suffered another drop after two straight months of increases to settle 4.2% lower in August, the central bank said Thursday.

Personal remittances totaled $2.756 billion (about ₱134 billion) for the month, clipping a monthly uptrend since May but still settling lower than last year's total.

In a statement, the Bangko Sentral ng Pilipinas explained that the drop was due to less money sent home by both land and sea-based overseas Filipino workers.

Of the remittances received for the month, amounts coursed through banks totaled $2.483 billion (about ₱120 billion), a decline of 4.1% from August 2019.

Land-based OFWs with more than one year contracts sent home $2.118 billion in August, down 4.6% from what they sent a year ago. Meanwhile, those with short-term work arrangements as well as those working at sea also sent home less money, which slid by 2.2% to $580 million.

More than 200,000 OFWs have flown home amid the global COVID-19 crisis, which has led to loss of jobs and lower incomes. The bulk of the returning workers came from the Middle East, accounting for nearly 75% as of the October 4 tally of the Labor Department. In turn, Saudi Arabia, Japan, and the United Arab Emirates seeing the biggest remittance declines for the month.

Meanwhile, remittances coursed through the United States, Singapore, and Malaysia kept growing.

A bank economist said the June-July growth in money inflows was likely due to back-to-school requirements under the "new normal," such as tuition fees and gadget upgrades as students learn online amid the pandemic. Remittances fell again after this initial bump.

"We may see the succeeding months to be soft as well and probably expect an inflows bonanza this coming month of December," UnionBank chief economist Ruben Carlo Asuncion said in an email, adding that growth could log close to the 7.6% rise seen in July.

"We know that December is seasonally a big month for remittances, like that of June or July."

Money sent home by Filipinos abroad inject additional cash into the local economy, fueling the spending needs and wants of their loved ones and spurring consumer demand which has slumped amid the COVID-19 pandemic.

The Philippine economy has been in recession, having shrunk by 9 percent during the first semester.

The eight-month remittance tally reached $21.414 billion (about ₱1 trillion), down by 2.6% from the $21.995 billion haul as of August 2019. The decline is bigger than the BSP's projected 2% drop for the full year.

Asuncion expects a wider contraction between 3-4%.