NextGen Day

Gains in the immunization program of nations where overseas Filipino workers (OFWs) are anticipated to increase remittance growth in the Philippines, along with global economic recovery.

Last July, the Bangko Sentral ng Pilipinas (BSP) reported a 2.6 percent year-on-year increase in remittances to USD3.167 billion, with a 6 percent year-to-date increase to USD19.783 billion.

In a study, senior economist Nicholas Mapa of ING Bank Manila stated that last July’s remittances increase is unexpected and “amazing considering that this was the greatest non-December level recorded, with money sent home in July matching those sent home over the Christmas season.”

“Secondly, the greater dollar amount shocked us since OFs (overseas Filipinos) had previously chosen to send homeless remittances when the peso was weakening because exchange rate dynamics let recipients meet peso requirements with fewer dollars sent home,” he said.

On Wednesday, the local currency ended at 49 cents, but it has since fallen to 50 cents, owing to worries about the epidemic and other factors.

“We may anticipate remittance flows to continue to rise in the next months, with OFs continuing finding ways to boost domestic consumption,” Mapa added.

With job losses continuing to rise and the economy staying poor, he predicted that OF remittances will take up the gap and increase local consumption.

“Sustained OF remittance flows, along with a rebound in BPO (business process outsourcing) revenues, would help balance the country’s growing trade deficit and minimize the effect on its current account,” he said.

Chief economist Michael Ricafort of Rizal Commercial Banking Corporation (RCBC) thinks that when certain OFW-host nations achieve or approach community-level protection against the coronavirus disease 2019 (Covid-19), demand for OFWs and remittances would rise even more.

Because many OFWs are economic and medical front-liners, remittances to the Philippines have been “partially resisting the epidemic,” according to Ricafort, who characterized them as “a symbol of resilience/bright spot/greenshoots.”

He claims that the continuous reopening of additional economies, particularly in hard-hit sectors like leisure, travel, and tourism, would need more employees, which will benefit OFWs.

“Continued increase in OFW remittances would help recovery in consumer spending, which accounts for almost 70% of the economy, as well as recovery in the country’s GDP (gross domestic product),” he added.

The continued resilience of OFW remittances is anticipated to improve the country’s balance of payment (BOP) situation and gross international reserves (GIR).

Risks, however, persist, according to Ricafort, due to more infectious Delta and Lambda Covid-19 versions, among others.

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