Metro Manila (CNN Philippines, May 15) – The Bangko Sentral ng Pilipinas expects even slower growth in remittances or money sent home by Filipinos abroad this year as the coronavirus pandemic continues to cost people their lives and livelihoods.
“To be on the conservative side, BSP adopted an amended forecast of 2.0 percent, which is less than 2.5 percent. That’s BSP’s latest forecast,” Diokno said on Friday.
The BSP previously cut the remittance growth target to a range of 2.2 percent to 2.8 percent, or an average of 2.5 percent for 2020 from the initial 3.0 percent growth goal.
Remittances support consumer spending at home, which in turn contribute to overall growth. Economists said slower growth in remittances could negatively impact local spending.
“We know that a large chunk of the economy is powered by domestic consumption,” Union Bank of the Philippines Chief Economist Ruben Carlo Asuncion said. “Anything that negatively impacts remittance inflows can instantly affect domestic household consumption.”
Meanwhile, BDO Chief Market Strategist Jonathan Ravelas said “restarting the global economy is key.”
The inter-agency Development Budget Coordination Committee said on Wednesday that the economy will contract between 2.0 percent to 3.4 percent this 2020, worse than their original projection of a “zero growth” to a 1 percent decline.
“The higher bound, 2.0 percent contraction, assumes there is fiscal stimulus,” Diokno said. “It also assumes that some 156,000 OFWs will lose jobs and that foregone remittances amount to ₱18 billion.”
Latest data from the BSP showed that while money sent home by overseas Filipinos increased in the first two months of the year, remittances from sea-based workers and land-based workers with work contracts of less than a year have declined.
Personal remittances grew 7.3 percent in January to $2.94 billion, while the month of February saw a 2.6 percent increase to $2.62 billion compared to the same time last year, the BSP said Friday.
The spike in remittances seen in January is considered seasonal, as those working abroad send more money to fund the celebrations and presents for their family and relatives during Christmas and New Year.
Cash sent home by overseas Filipinos through banks also grew by 4.6 percent to $5 billion for the first two months of 2020.
The bulk of remittances came from the United States, which took a 39 percent share. Other major sources of funds were Filipinos in Singapore, Japan, Saudi Arabia, United Kingdom, United Arab Emirates, Qatar, Canada, Hong Kong, and Korea, which combined accounted for 79.4 percent of total cash remittances.
Remittances are a big source of disposable income among Filipino families, as the dollars that Filipinos send support food, daily expenses, and even luxuries of their relatives in the Philippines. This boosts household spending, which props up the country’s economic growth.
Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said Friday that the agency has again revised the remittance growth target downward.
