Remittances sustain growth to $3B in July despite pandemic

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(FILE PHOTO)

Metro Manila (CNN Philippines, September 15) — Remittances from Filipinos abroad sustained their uptrend in July to hit $3.09 billion (about ₱150 billion), the Bangko Sentral ng Pilipinas said Tuesday.

Personal remittances grew by 7.6 percent from July 2019, and marks a second straight increase this year despite the global COVID-19 crisis. The inflows were likewise the biggest so far this year, hovering close to the surge in remittances during last year's Christmas season.

Land-based overseas Filipino workers led the pickup, sending home 12.6 percent more funds than last year. Meanwhile, those working at sea such as cruise ship workers sent nearly a tenth less, as many were rendered jobless and were sent home due to the pandemic.

READ: Pace of global recovery to dictate future of remittances – BSP

The seven-month remittance tally reached $18.66 billion, which is down by 2.4 percent from the same period last year. However, this decline is milder than the 5 percent expected by the central bank.

By source, Filipinos in the United States remained the top remitters, accounting for 40 percent of the running tally according to the BSP. Those based in Japan, Singapore, Qatar, and Taiwan followed, sustaining continued growth in wired cash despite the global economic slump.

Meanwhile, declines were recorded in terms of cash sent by Filipinos in Saudi Arabia, United Arab Emirates, Germany, Kuwait, and the United Kingdom. Ruben Carlo Asuncion, chief economist at Union Bank of the Philippines, said the decline in remittances from the Middle East reflected the collapse in global oil prices, as limited movement led to a crash in fuel consumption.

While he expects a decline in money transfers by 5-10 percent this year, Asuncion said there may be room to revise these observations given signs of recovery seen in the global manufacturing scene. The analyst added that overseas Fiipino workers in the Middle East may also benefit from potential recoveries from non-oil sectors.

"These may be scant evidence of the likelihood of a bounce back, but it seems that certain economic variables have been pointing to, indeed, a more positive trend," Asuncion told CNN Philippines.

Remittances are a big source of disposable income among Filipino families, as the dollars sent home provide for food, daily expenses, and even luxuries of their loved ones in the Philippines. This boosts household spending and supports economic activity, which has slumped due to local lockdowns.

Some 185,000 OFWs have been brought home by authorities since the pandemic started, leading to temporary job losses. The peso has also gained strength to average ₱49 per US dollar, leaving their money transfers with a lower value when converted into the local currency.