Remittances expand in April but inflation a threat

MANILA, Philippines — Money sent home by Filipinos overseas gained traction in April, although growth might moderate in the coming months amid a worldwide trend of rising commodity prices.

What’s new

Cash remittances coursed through banks rose 3.9% year-on-year in April to $2.39 billion, the Bangko Sentral ng Pilipinas reported Wednesday. This was slightly faster than the 3.2% growth recorded in March.

Year-to-date, cash remittances amounted to $10.17 billion.

Why it matters

Remittances are considered pillars of economic strength for the Philippines' consumption-driven economy, as money sent home by migrant Filipinos helps increase the spending capacity of their families here.

Likewise, remittances are also crucial sources of dollars for the country. In 2021, remittances amounted to $31.42 billion, expanding 5.1% compared to the 2020 haul. The collections slightly missed the BSP's forecast of 6% growth, but BSP Governor Benjamin Diokno said he hopes remittances would rise this year.

For 2022, the BSP projects cash remittances to grow 4% annually.

What an analyst says

Sought for comment, Nicholas Antonio Mapa, senior economist at ING Bank in Manila, expects remittances to grow modestly in the coming months.

"Remittance flows to remain positive but will likely see a modest pace of expansion in the near term. Global slowdown and favourable exchange point to a 3-4% expansion for the year," he said in a Viber message. 

The peso weakened earlier this week as it hit P53 against the greenback.

"Despite the gain, remittance growth unable to offset stark widening of trade gap. Philippine peso to remain weak in the near term given trade balance dynamics and monetary policy stance," Mapa added.

Other figures

• The BSP said 41.2% of cash remittances in the first four months came from the United States, while the rest came from Singapore, Saudi Arabia, Japan, the United Kingdom, the United Arab Emirates, Canada, Qatar, South Korea, and Taiwan.
• Remittance from land-based workers inched up by 4.7% year-on-year to $1.86 billion in March. Sea-based workers brought in a total of $533 million, which inched up 1.4% year-on-year.