Bangko Sentral sees slight increase in February OFW remittances

MANILA, Philippines - After registering a flat growth rate in January, the Bangko Sentral ng Pilipinas (BSP) expects remittance flows to increase in February as newly-deployed workers start sending money home to their families.

Remittances hit a plateau in January this year — the first time since 2000 that inflows from overseas Filipinos did not increase as the global economy suffered from sharp job losses due to the economic recession in developed countries.

BSP Deputy Governor Diwa Guinigundo told reporters yesterday that the government recorded a 26 percent increase in the deployment of workers in January.

But Guinigundo said the increase in remittances would not reflect in the inflows until February or March, which he said indicated an increase in remittance flows.

“I think remittances would be better than the 0.1 percent growth we recorded in January,” Guinigundo said.

But Guinigundo said the whole-year projection made by the BSP is still zero for 2009, indicating that while there would be months when remittances would increase, total remittances would still be around $16.4 billion — the same level as 2008.

Guinigundo said remittances registered a flat growth rate in January because of the combined effect of the decline in inflows due to the loss of jobs abroad by deployed workers.

But Guinigundo said the offsetting impact of the increase in deployment would result in a net increase in inflows although he said there would still be job losses among deployed workers.

Guinigundo said remittances are also affected by the exchange rate, with overseas Filipinos normally opting to send less in dollar terms when the peso is weak and sending home more in dollar terms when the peso is strong.

But Guinigundo said this factor is no longer as significant as before when overseas Filipinos sent funds home purely for consumption purposes. He said a significant portion of overseas Filipinos now send money home not just for consumption but also investments.

“OFW families often have investments in real estate or vehicles and also small businesses,” Guinigundo said. “That actually has the effect of stabilizing inflows because investment becomes a core inflow that would not necessarily change when the exchange rate moves in either direction.”

Guinigundo said in the BSP’s latest Consumer Expectation Survey, that the families of overseas Filipinos are saving more of their family income as consumers brace against the full impact of the economic slowdown.