Fastest in five months: Cash remittances jump by 3.6% in May — BSP
By Luisa Maria Jacinta C. Jocson, Reporter
MONEY SENT HOME by overseas Filipino workers (OFWs) rose by 3.6% in May, its fastest pace in five months, data from the Bangko Sentral ng Pilipinas (BSP) showed.
The BSP on Monday reported that cash remittances coursed through banks grew by 3.6% to $2.58 billion in May from $2.49 billion in the same month a year ago.
The growth in cash remittances was its fastest in five months or since the 3.8% logged in December 2023.
Month on month, remittances inched up by 0.8% from $2.56 billion in April.
“The expansion in cash remittances in May 2024 was due to growth in receipts from both land- and sea-based workers,” the BSP said in a statement.
Remittances from land-based workers jumped by 3.8% to $2.06 billion while money sent home by sea-based workers grew by 2.6% to $519.373 million.
In the January-to-May period, cash remittances increased by 3% to $13.365 billion from $12.981 billion a year ago.
This was also its fastest pace of annual growth in a year or since the 3.1% recorded in May 2023.
“The growth in cash remittances from the United States, Saudi Arabia, and Singapore contributed mainly to the increase in remittances in January-May 2024,” the central bank said.
In the first five months, the United States accounted for 40.9% of total remittances.
This was followed by Singapore (7.2%), Saudi Arabia (6.1%), Japan (5.1%), the United Kingdom (4.7%), the United Arab Emirates (4%), Canada (3.4%), Korea (2.8%), Qatar (2.8%) and Taiwan (2.7%).
“This 3.6% increase (in May), reaching $2.58 billion, suggests a combination of positive factors. Economic growth in key remittance source countries like the US, Saudi Arabia, and Singapore might be putting more money in the pockets of OFWs,” Security Bank Corp. Chief Economist Robert Dan J. Roces said in a Viber message.
Mr. Roces said that rising wages of OFWs could also be another factor behind faster remittance growth.
“Finally, favorable exchange rates incentivize sending more money back as it translates to a bigger bump in Philippine pesos received,” he added.
In May, the peso sank to the P58-per-dollar level for the first time since November 2022.
“The continued growth nevertheless is still a good signal for the overall economy as an important growth driver, especially in terms of consumer spending, which accounts for about 74% of the Philippine economy,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
Mr. Ricafort also noted there was a seasonal increase in remittances due to the summer holiday.
Meanwhile, personal remittances rose by 3.7% to $2.88 billion during the month from $2.78 billion. This brought personal remittances at end-May to $14.89 billion, higher by 3% from $14.46 billion in the same period a year ago.
“The increase in personal remittances in May 2024 was due to remittances from land-based workers with work contracts of one year or more and sea- and land-based workers with work contracts of less than one year,” the BSP added.
For the coming months, Mr. Ricafort said he expects modest growth in remittances as OFW families “still need to cope up with relatively higher prices locally that would require the sending of more remittances.”
For the first six months of the year, headline inflation averaged 3.5%. This was slightly higher than the central bank’s 3.3% full-year forecast.
Mr. Ricafort also noted there is a seasonal increase in remittances during the July-August period due to the need to pay for school tuition payments.
The central bank expects cash remittances to grow by 3% this year.