August decline ends dollar remittance bounce as OFW job losses mount

MANILA, Philippines—Expatriate Filipinos sent home fewer dollars in August, ending a two month rebound, as overseas job losses due to the COVID-19 pandemic mounted, according to new data from the Bangko Sentral ng Pilipinas (BSP).

In a statement, the central bank said personal remittances from overseas Filipinos in August 2020 declined year-on-year by 4.2 percent to $2.756 from $2.875 billion in the same period in 2019.

This brought the cumulative remittances for the first eight months of 2020 to $21.414 billion, a slight decrease of 2.6 percent from the $21.995 billion recorded in the comparable period in 2019.

Nicholas Mapa, ING Manila senior economist, said the rebound of remittances in June and July was due to overseas Filipinos sending home much-needed funds immediately after the lockdowns in their foreign postings, helping boost remittances back into expansion in those months. This phenomenon, however, has since corrected itself.

“By August, pent up flows finally faded with Filipinos facing challenging labor markets abroad while the stock of overseas Filipinos declined significantly, resulting in the contraction,” he said.

Personal remittances from land-based workers with work contracts of one year or more declined to $2.118 billion in August 2020, 4.6 percent lower than $2.221 billion recorded in August 2019.

Similarly, remittances from sea-based workers and land-based workers with work contracts of less than one year fell by 2.2 percent to $580 million in August 2020 from $593 million in 2019.

Cash remittances coursed through banks declined by 4.1 percent to $2.483 billion in August 2020 from $2.589 billion in August 2019.

From January to August, cash remittances amounted to $19.285 billion, 2.6 percent lower than the $19.808 billion registered in the comparative period in 2019.

“This was due to the decline in remittances from both land-based and sea-based workers, which fell by 1.9 percent to $15.183 billion from $15.476 billion, and 5.3 percent to $4.101 billion from $4.332 billion,” the central bank said.

By country source, the decline in remittances in August was noted from Saudi Arabia, Japan and the United Arab Emirates. These were partly offset by remittance growth from the United States, Singapore and Malaysia.

ING’s Mapa said he expects remittance flows by end of the year to be down by 5-10 percent with workers overseas abroad still facing challenging labor markets where they are.

Meanwhile, the number of deployed Filipino workers overseas is expected to fall by roughly 300,000 after wide-scale repatriations.

“The loss of remittance support to household consumption will likely be felt well into 2021, weighing on growth rebound prospects,” Mapa warned.

TSB