BSP keeps remittance target for 2015 amid August contraction

The central bank is still hopeful migrant workers will send more money home this coming holiday season, providing much-needed support for the domestic economy.

A senior official said the Bangko Sentral ng Pilipinas (BSP) would stick to its growth target for overseas Filipino worker (OFW) remittances this year, despite recent signs of weakness.

Cash transfers from OFWs, the country’s largest source of dollars, fuel a significant portion of the Philippine economy. Last year, money sent home reached the equivalent of about a tenth of the gross domestic product (GDP).

“We continue to see robust deployment to different regions and territories. Filipino skills remain in big demand,” BSP Deputy Governor Diwa C. Guinigundo told reporters Friday.

In August, remittances to the Philippines declined by 0.6 percent year-on-year. The last time remittances contracted was in April 2003.

The BSP still expects remittances to grow by 5 percent for all of 2015 to a record-high of $25.6 billion.

August’s decline was traced to a host of factors. For one, global economic conditions were weak in September, particularly in advanced economies where most OFWs are based.

The value of emerging market currencies also dipped against the US dollar during the month. A weaker currency means OFWs can afford to send less money and still pay for peso-denominated expenses.

A stronger dollar also drives down the value of remittances denominated in other currencies. Remittance data is reported in US dollar terms.

“Despite the soft global growth, OFWs continue to find opportunities because of their diversified skills and competencies,” Guinigundo said.

“In fact, in the last quarter of the year, we expect renewed heavy inflows because of the holidays,” he added.

Cash remittances rose to a record high of $2.31 billion in December 2014, the most for any single month in the country’s history. This means the total for December this year would be compared to a high base.

The Philippines is among the top four remittance recipients in the world, together with China, Mexico, and India. Among the four, the Philippines is the most reliant on migrant cash transfers, according to World Bank data.