Remittances rise to $2.78 billion in May

MANILA, Philippines — Dollars sent home by Filipinos abroad grew by almost three percent to $2.78 billion in May as overseas workers finance holiday and school break-related spending here in the country.

Data from the Bangko Sentral ng Pilipinas (BSP) showed that personal remittances – the sum of net compensation of employees, personal transfers, and capital transfers between households – reached $2.78 billion in May.

This is 2.9 percent higher than the $2.71 billion in the same month last year, but the latest growth rate was slower than the 3.8 percent growth recorded a month earlier.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the growth of remittances in May could be due to holiday-related and vacation spending of overseas Filipino workers (OFW) families and as more people return to provinces following the school break.

Ricafort said the still elevated inflation also required more OFW remittances to families and dependents in the Philippines.

The BSP said the increase was brought about by the 2.8-percent rise in remittances sent by land-based OFWs with work contracts of one year or more, to $2.16 billion from $2.1 billion.

Similarly, remittances from sea and land-based OFWs with work contracts of less than one year also grew at the same pace of 2.8 percent, to $550 million from $540 million.

For the five-month period, personal remittances inched up by 3.1 percent to $14.46 billion from $14.02 billion in the same period in 2022.

Cash remittances coursed through banks also improved by 2.8 percent to $2.49 billion.

The expansion in cash remittances in May was due to the growth in receipts from land and sea-based OFWs.

Cash remittances from land-based OFWs increased by almost three percent to $1.99 billion while the amount sent home by sea-based workers went up by 2.4 percent to $510 million.

From January to May, cash remittances picked up by 3.1 percent to reach $12.98 billion from the 2022 level of $12.59 billion.

“The growth in cash remittances from the US, Singapore and Saudi Arabia contributed mainly to the increase in remittances in the first five months of 2023,” the BSP said.

As to overall remittances for the five-month period, the US topped the list with a share of 41 percent, followed by Singapore with 7.1 percent, and Saudi Arabia with six percent.

Other top sources include Japan, the UK, United Arab Emirates, Canada, Korea, Qatar and Taiwan.

Further, Ricafort warned that risk of recession in the US due to the aggressive US Federal Reserve could be a drag for OFW remittances moving forward which could lead to job losses. This, however, could be offset by the economic reopening in China.

Remittances remain one of the major sources of dollars, together with revenues from the business process outsourcing sector, tourism receipts, and earnings of exporters that help boost the country’s gross international reserves.

Last year, the BSP fell short of its four percent growth target for remittances after dollars sent home by Filipinos grew by just 3.6 percent to $36.14 billion.

For 2023, the central bank already lowered the target for both personal and cash remittances to just a three percent expansion.