Cash remittances from overseas Filipino workers (OFWs) showed resilience in April 2024, marking a 3.1% year-on-year increase to $2.562 billion, as reported by the Bangko Sentral ng Pilipinas (BSP) on Monday, June 17. This rise follows fluctuations in previous months and represents a stabilizing trend in remittance flows despite global economic uncertainties.
The latest data from the BSP revealed that April's remittance figure, while showing growth, also represented a decline from the previous month's $2.738 billion, down by 6.4%. Nevertheless, analysts view the year-on-year increase as a positive signal for the Philippine economy amidst ongoing challenges.
Factors Driving Remittance Growth
Economic analysts attribute the growth in cash remittances to several key factors. Notably, both land- and sea-based workers contributed to the overall increase. Remittances from land-based workers rose by 3.2% to $2 billion, while those from sea-based workers saw a more modest increase of 2.8%, totaling $560 million. This indicates a broad-based recovery in remittance flows across different sectors of OFW employment.
Economic Implications and Outlook
Michael L. Ricafort, Chief Economist at Rizal Commercial Banking Corp., pointed out that the continued growth in remittances serves as a "bright spot" in the Philippine economy. He noted that increased spending among OFW families, supported by the gradual reopening of the economy, played a significant role in driving remittance flows higher.
Furthermore, Mr. Ricafort highlighted the impact of currency movements on remittance behavior. The recent depreciation of the Philippine peso against the US dollar, with the peso reaching the P57 level in April, and further declining to P58 in May, potentially reduced the need for larger remittance amounts in foreign currency terms. This depreciation has provided some relief for OFW families facing higher local prices and increased interest rates since 2022.
Looking ahead, analysts anticipate modest growth in OFW remittances for the remainder of the year. Mr. Ricafort projected a 3% increase in cash remittances for 2024, reflecting cautious optimism amidst economic adjustments and ongoing recovery efforts. The BSP's expectations align with this forecast, indicating confidence in the resilience of OFW remittances despite global economic uncertainties.
