July cash remittances hit 7-month high

By Luisa Maria Jacinta C. Jocson, Reporter

MONEY SENT HOME by overseas Filipino workers (OFWs) rose to a seven-month high in July, data from the Bangko Sentral ng Pilipinas (BSP) showed.

Cash remittances coursed through banks climbed by 3.1% to $3.085 billion from $2.992 billion a year ago, the central bank said on Monday.

This was the highest monthly level since the $3.28 billion recorded in December 2023.

Month on month, remittances jumped by 7% from $2.882 billion in June.

“The expansion in cash remittances in July 2024 was due to the growth in receipts from land- and sea-based workers,” the BSP said.

Money sent home by land-based workers increased by 3.6% year on year to $2.52 billion, while remittances from sea-based workers inched up by 0.9% to $567.996 million.

“Cash remittances from OFWs have hit a new high. This surge is likely due to factors like economic recovery and improving sentiment, tempering inflation, and improved remittance channels,” Security Bank Corp. Chief Economist Robert Dan J. Roces said in a Viber message.

The Philippine economy grew by 6.3% in the second quarter, the fastest since 6.4% in the first quarter of 2023.

For the first half of the year, gross domestic product (GDP) expansion averaged 6%. To meet the low end of the government’s 6-7% growth target, the economy must expand by at least 6% in the second semester.

Headline inflation in July hit a nine-month high of 4.4%. In August, it slowed to 3.3%, returning within the BSP’s 2-4% annual target.

The central bank expects inflation to continue easing in the coming months.

“The latest month-on-month increase came after some seasonal increase in remittances and conversion to pesos to partly finance some holiday-related spending during the school vacation season amid better weather conditions,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

He added that July remittances rose on the back of school-related expenses amid the start of the academic year, which likely continued until August.

For the first seven months, cash remittances from OFWs rose by 2.9% to $19.332 billion from $18.785 billion a year earlier.

“The growth in cash remittances from the United States, Saudi Arabia and United Arab Emirates contributed mainly to the increase in remittances in January-July 2024,” the central bank said.

The United States accounted for 41.1% of the cash remittances recorded in the seven-month period, followed by Singapore (6.9%), Saudi Arabia (6%), Japan (5%) and the United Kingdom (4.9%).

Other top sources of remittances were the United Arab Emirates (4.2%), Canada (3.5%), Qatar (2.8%), and Taiwan and Korea (both at 2.7%).

The BSP expects cash remittances to grow by 3% this year.

Remittances continue to be a “bright spot” for the economy, Mr. Ricafort said.

He added that he expects sustained “modest” growth in cash remittances in the coming months as OFW families and dependents still need to cope with elevated inflation.

“The risk of an economic slowdown or even a recession in the US, as well as in other countries that host large numbers of OFWs, partly due to aggressive Federal Reserve rate hikes since March 2022, would still be a drag for OFW remittances, especially if there would be job losses for some OFWs,” he added.

PERSONAL REMITTANCES
Meanwhile, BSP data showed that personal remittances from OFWs stood at $3.428 billion in July, rising by 3.2% from $3.321 billion a year ago.

“The increase in personal remittances in July 2024 was due to higher remittances from land-based workers with work contracts of one year or more and sea- and land-based workers with work contracts of less than one year,” it added.

Remittances from workers with more than one-year contracts grew by an annual 3.4% to $2.72 billion, while money sent by OFWs with shorter than one-year contracts went up by 1.7% to $630 million.

In the first seven months, personal remittances rose by 3% year on year to $21.532 billion