EDITORIAL - Remittance slowdown

The government is adopting a sanguine approach to the reciprocal tariffs imposed by US President Donald Trump. Apart from noting that the Philippines has been slapped with the second lowest tariff in Southeast Asia, administration officials have also pointed out that the economy is not heavily reliant on exports.

What powers the Philippine economy is consumption, and much of the wherewithal for this comes from the remittances of the country’s massive army of overseas Filipino workers. And OFW jobs are vulnerable to a global economic slowdown that now looms due to Trump’s unilateral imposition of punishing tariffs.

Trump has paused the effectivity of most of the tariffs for 90 days, and seems to keep changing his mind on the issue from day to day depending on his mood. Analysts, however, say that the consequent uncertainty and damage to the global economic order will persist and will take time to reverse, even if sanity returns to the White House and US policies become more predictable.

A month before Trump announced his tariffs on what he dubbed as “Liberation Day” for America, OFW remittances had already slowed down. Bangko Sentral ng Pilipinas data showed that OFWs remitted a total of $3.02 billion in February – the lowest monthly inflow in nine months, since the $2.88 billion in May 2024.

Analysts described it as a post-holiday slowdown after the traditional Christmas consumption spike, but also cited external headwinds including slower growth in major economies as well as currency volatility. These factors are likely to worsen as Trump’s protectionist “make America great again” policies upend global trade, investments and job opportunities.

The US economy itself is expected to take a hit as experts warn of a possible global recession arising from a bitter trade war. Crude oil has been among the first to feel the impact of the trade war fears, plummeting to 2021 pandemic levels, although the consequent drop in fuel prices at the pumps is welcomed by consumers.

The oil-producing countries of the Middle East are among the biggest employers of OFWs. Meanwhile, the US until recently accounted for the highest growth in OFW remittances, which could be affected by his tough anti-immigration policies.

As other governments have pointed out, there is no room for complacency in the looming global trade wars. The Philippine government must brace for the worst and prepare to assist OFWs who might be displaced, even as it works to pursue what it sees as a silver lining in Trump’s policies.