NextGen Day

MANILA – Cash remittances received by overseas Filipino workers (OFWs) increased by 3.2 percent year on year to USD2.594 billion in March, with an expert predicting a sustained rise as more economies reopen.

Cash remittances increased by 2.4 percent year on year to USD7.77 billion in the first quarter of this year, according to data issued by the Bangko Sentral ng Pilipinas (BSP) on Monday.

Even if the volume has decreased from the record-high monthly inflow of USD2.987 billion in December 2021, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort stated remittances remain a bright area for the domestic economy in a report.

“(Remittances) are still a bright spot for the Philippine economy/GDP (gross domestic product), especially on consumer spending, which amounts for at least 75% of the economy, as the world and local economies reopened to greater normalcy,” he said.

For decades, OFW inflows have been a major growth driver in the domestic economy.

It has demonstrated its resiliency in the face of multiple crises, and authorities and economies regard this as a positive factor in the economy’s growth.

Economic activity is likely to remain healthy, according to Ricafort, with the continued easing of mobility restrictions in the country to Alert Level 1 as of last March.

He claims, however, that “the weaker peso exchange rate vs. the US dollar in recent months (peso among the weakest in 2.5 years or since August 2019) could have somewhat reduced the amount of OFW remittances sent/needed to pay for the same amount of spending/expenses in pesos in the country,” citing “the weaker peso exchange rate vs. the US dollar in recent months (peso among the weakest in 2.5 years

The reopening of more economies is also a plus for remittances, while other offsetting factors include Russia’s invasion of Ukraine, an increase in the US and global bond yields in anticipation of Federal Reserve rate hikes, and China’s recent lockdowns, which could have an impact on global growth, he added.

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