Cash sent back to the Philippines by migrant workers grew at a steady pace in June to its highest level for the year, providing support for domestic consumption.
Data from the Bangko Sentral ng Pilipinas (BSP) showed that remittances received a boost from land-based workers with contracts of at least a year, which supported the stability of the country’s main source of dollar income.
The BSP cited “stable demand for skilled Filipinos abroad,” primarily from Middle Eastern countries, as the main driver of remittance growth for the month.
In June, cash transfers rose by 6.1 percent to $2.18 billion, the highest level since December of last year. This follows the usual trend of remittances inching up as the year progresses before peaking during the December holiday season.
June’s result brought the year-to-date total to $12.08 billion, higher by 5.6 percent year-on-year.
Remittances are the biggest source of dollar income for the Philippines, which keeps the peso strong by ensuring the steady supply of foreign exchange that local businesses and the government need for transactions overseas.
These transactions include debt amortization and payments for imported goods.
Apart from keeping the country’s external payments position favorable, remittances are also a major driver for domestic spending.
Last year, remittances reached a record high of $24.3 billion, accounting for nearly a tenth of gross domestic product.
The United States, Saudi Arabia, the United Arab Emirates, the United Kingdom, Singapore, Japan, Hong Kong, and Canada were the largest sources of remittances for the month, the BSP said.
However, the regulator issued a disclaimer, noting that remittances from the US might be artificially inflated due to the “common practice” of remittance centers in various cities to transfer money through branches of US-owned banks.
The BSP said much of the growth came from land workers with long-term contracts. Cash transfers from this segment rose 6.1 percent, compared to workers with short-term contracts lasting less than a year, whose remittances rose by 3.7 percent.