MANILA, Philippines — Dollars sent home by expatriate Filipino workers are set to contract for the first time in almost two decades by the end of this year, no thanks to the massive repatriations of labor caused by the coronavirus pandemic.
In a mobile phone message to the press, however, Bangko Sentral ng Pilipinas Governor Benjamin Diokno held out hope for a strong recovery by 2021 once the effects of the COVID-19 crisis dissipate.
“Despite being resilient in past crises, overseas Filipino remittances [for 2020] is seen to contract by 5 percent, a reversal from the 3 percent growth in the November 2019 projection.”
In monetary terms, that projected decline will result in $2.1 billion fewer dollars coming into the local economy from overseas, as the remaining Filipino workers employed abroad are seen to send home a total of only $28.6 billion this year from the original expectation of $30.7 billion.
The last time the Philippines experiences an annual decline was in 2001 when dollar remittances slipped by 0.3 percent. The expected decline this year will also be the biggest since the 18.3-percent contraction seen in 1999, according to BSP data.
Diokno said the central bank’s lower projection “is due mainly to large repatriation of workers and major economic disruptions in host countries.”
“The overseas Filipino remittances are expected to bounce back by 4 percent in 2021, however,” he added.
As of the latest available data, dollar remittances of expatriate Filipinos continued to rise in February just as the coronavirus pandemic was starting to spread around the world.
According to the BSP, personal remittances from overseas Filipino workers amounted to $2.62 billion in February 2020, which was higher by 2.6 percent from $2.56 billion recorded in the same month last year.
On a year-to-date basis, remittances for the first two months of 2020 grew by 5 percent to $5.566 billion from the $5.302 billion recorded in the same period last year.
Meanwhile, the central bank chief said that the 2020 and 2021 levels of the Philippines’ balance of payments – the overall tally of the country’s transactions with the rest of the world – are projected to sustain the current surplus trend, though at levels lower than prior to the COVID-19 pandemic.
The projected balance of payments surplus as a percentage of gross domestic product will fall from 0.7 percent as of the November 2019 forecast to 0.2 percent as of May 2020. It will increase to 0.6 percent by 2021, the central bank chief said.
“The reassessment incorporates key developments during the first four months of 2020 and 2021 balance of payments outlooks since it was approved by the Monetary Board on Dec. 11, 2019,” he said, adding that this included expectations of sharp contractions in both global and domestic economic activities in 2020, followed by a strong recovery in 2021.