Remittance growth forecast remains dim
The Bangko Sentral ng Pilipinas (BSP) on Friday kept its negative growth projection for overseas Filipino worker (OFW) remittances this year as the coronavirus pandemic continues to affect deployment. “Considering that there are already OFWs being repatriated, particularly from the sea-based sector, we see that there will be some contraction in remittances by about 0.2 […]
The Bangko Sentral ng Pilipinas (BSP) on Friday kept its negative growth projection for overseas Filipino worker (OFW) remittances this year as the coronavirus pandemic continues to affect deployment.
“Considering that there are already OFWs being repatriated, particularly from the sea-based sector, we see that there will be some contraction in remittances by about 0.2 to 0.8 percentage points,” Iluminada Sicat, the central bank’s assistant governor for the monetary policy subsector, said during a virtual briefing.
Further contraction in such remittances is possible if the pandemic continues, she warned.
“The uncertainty to the outlook is linked to the fact that we are not sure how quickly our global trade activity [would] rebound over the next year or so in response to the measures implemented by various central banks and fiscal authorities. So that puts a lot of uncertainty over the global outlook,” Sicat said.
The BSP initially estimated a 3-percent growth for OFW remittances this year after personal remittances hit an all-time high of $33.46 billion in 2019, a 3.9-percent increase from $32.21 billion in 2018.
ING Bank Manila senior economist Nicholas Antonio Mapa shared the central bank’s view, saying money from abroad would likely experience a 2.5-percent contraction due to the pandemic.
“[W]ith lockdowns implemented in several countries, Filipinos deployed overseas may not have enough income to send back home to their families in the first place,” he said.
“Lastly, we note a worrisome trend showing that more than 16,000 Filipino workers (and counting) [are] returning from host countries and seafaring vessels as Covid-19 destroyed jobs across the globe,” Mapa added.
Earlier, the World Bank said remittance flows in East Asia, which includes the Philippines, were likely to decline this year because of the pandemic.
“Remittance flows to [this] region grew by 2.6 percent in 2019, about 4.3 percentage points lower than [their] growth rate in 2018. In 2020, remittance flows are expected to decline by 13 percent due to the impact of Covid-19,” it projected in its “Covid-19 Crisis Through a Migration Lens” report.
The slowdown is expected to be driven by declining inflows from the United States, the largest source of remittances to the region, and Hong Kong.