Dollars sent home by expatriate Filipinos declined in March, marking the first time that the impact of the coronavirus pandemic was manifested in monthly remittances which are a key pillar of the Philippine economy.
In a statement, the Bangko Sentral ng Pilipinas attributed this drop to labor cutbacks in the oil industry of the Middle East, which employs a substantial number of skilled Filipino workers — thousands of whom have been repatriated in recent weeks.
Personal remittances from overseas Filipinos amounted to $2.652 billion in March 2020, lower by 5.2 percent than the $2.796 billion recorded in March 2019.
“The decline in cash remittances in March was largely due to the lesser number of Filipinos deployed overseas in the first three months of 2020 relative to the comparable level last year,” the central bank said.
The countries that registered the declines in cash remittances in March were mostly from oil-producing countries — Saudi Arabia, United Arab Emirates and Kuwait — where demand for workers was affected by depressed oil prices in the world market.
This brought the total remittances for the first quarter of 2020 to $8.218 billion which is, however, still 1.5 percent higher compared to the $8.098 billion posted in the same period last year.
Personal remittances from land-based workers with work contracts of one year or more declined to $2.014 billion in March 2020, 6.7 percent lower than $2.157 billion recorded in March 2019. Meanwhile, remittances from sea-based workers and land-based workers with work contracts of less than one year rose by 2.7 percent to $591 million from $575 million from a year ago.
Similarly, overseas Filipino cash remittances that are coursed through banks declined by 4.7 percent to $2.397 billion in March 2020 from $2.514 billion in March 2019.
Notwithstanding the decline in March, cash remittances for the first quarter of 2020 managed to post a modest increase of 1.4 percent to $7.403 billion from the $7.299 billion registered in the same period last year.
The slight growth for the quarter was supported by remittances from both land-based ($5.79 billion) and sea-based ($1.613 billion) workers, which rose by 1.3 percent and 1.8 percent, respectively.
By country source, the United States registered the highest share to overall remittances at 39 percent in March 2020. It was followed by Singapore, Saudi Arabia, Japan, United Kingdom, United Arab Emirates, Qatar, Canada, Hong Kong, and Korea.1 The combined remittances from these countries accounted for 79.1 percent of total cash remittances.
On Thursday, the central bank said that expatriate Filipino remittances 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 pandemic.
“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,” BSP Governor Benjamin Diokno said, but added that he expects a 4-percent recovery next year.