OFW remittances to grow 4% this year and in 2023

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) is confident that remittances from overseas Filipino workers (OFWs) can still grow by four percent this year despite the soft increase this year.

Dennis Lapid, officer-in-charge of the Department of Economic Research, said there is an uptick in the deployment of OFWs.

“Anything can happen, but we think we are fairly confident that the four percent is achievable. And we based this mainly on the data that we have seen so far this year,” Lapid said.

According to Lapid, the deployment of OFWs jumped 40 percent to about 760,000 from January to September this year amid the rising demand for Filipino workers and the reopening in host economies because of their labor supply constraints.

These labor shortages, he said, include demand for workers in the healthcare and medical sector, as well as for workers and recreational and leisure industry.

He said the government is also actively pursuing bilateral labor agreements with key OFW host economies, including Germany, Canada, the United Kingdom, and Japan.

Lapid also cited the continued increased use of digital platforms for payments that allows OFWs to continue sending money to their beneficiary families in the Philippines.

“The reduced remittance fees are also expected to help boost the overall flows of remittances for this remittances for this year and also for next year,” Lapid said.

Latest data showed that personal remittances – the sum of net compensation of employees, personal transfers, and capital transfers between households – inched up by 3.1 percent to $26.49 billion.

Likewise, cash remittances coursed through banks grew by 3.1 percent to $23.82 billion during the nine-month period.

The peso slumped by as much as 15.7 percent to hit an all-time low of 59 to $1 last October, but has bounced back to the 55 to $1 due to the series of rate hikes by the BSP Monetary Board to match the aggressive increase delivered by the US Federal Reserve, as well as the central bank’s active intervention in the foreign exchange market to smoothen the volatility.

The strong dollar benefits OFWs as this increases the value of their remittances, but the effects are offset by soaring prices of goods in the country.

The Cabinet-level Development Budget Coordination Committee (DBCC) now expects the peso to range from 54 to 55 to a dollar this year and further weaken to 55 to 59 in 2023.

The local currency is seen appreciating and stabilizing within the 53 to 57 to $1 between 2024 and 2028.

In 2021, the BSP missed its six percent growth forecast as personal and cash remittances went up by only 5.1 percent. Personal remittances increased to an all-time high of $34.88 billion, while cash remittances reached new record high of $31.42 billion.