NextGen Day

An economist predicts that the remittances of overseas Filipino workers (OFWs) will continue to expand somewhat, citing the necessity for recipients to cover increased spending brought on by high inflation.

On Monday, the Bangko Sentral ng Pilipinas (BSP) stated that remittances increased by 3% annually to USD2.67 billion in March 2023, a slower growth rate than the 3.2% increase in the same month last year.

According to a report, the chief economist of Rizal Commercial Banking Corporation (RCBC), Michael Ricafort, partially attributed the slower remittance growth to the weaker Philippine peso, higher inflation rates even in countries where the OFWs are based, and the potential effects of US recession on some workers’ employment.

Due to the greater conversion rate between the US dollar and the Philippine peso, Ricafort claimed that the local currency’s decline relative to the US dollar “partially reduced the need to send more OFW remittances.”

However, he asserted that the necessity to transfer money to the remittance beneficiaries will continue to fuel its growth due to both the normalization of spending after the economy has been reopened and the rising cost of living caused by inflation.

According to Ricafort, even though most schools’ start dates have been shifted from June to August, OFWs will still send money for educational-related expenses, which will continue to be one of the factors driving remittance inflows.

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