The recent increase in remittances from Filipinos overseas may be short-lived as the prolonged pandemic continues to constrain the deployment of workers abroad, according to UK-based think tank Pantheon Macroeconomics.
In a report on Wednesday, Pantheon Macroeconomics senior Asia economist Miguel Chanco noted that cash sent home by Filipinos working or living abroad beat expectations of a decline in June as actual inflows grew by 7 percent year-on-year to $2.64 billion.
‘Far from booming’
“These inflows are vital for the recovery, and their 6-percent adjusted monthly jump in June [compared to May remittances]—the biggest in a year—is hard to ignore,” Chanco said.But Chanco cautioned that remittances were actually “far from booming.”
He said “the spike could be a one-off with overseas Filipinos merely taking advantage of the peso’s selloff since mid-June.” The peso recently crossed the 50:$1 level.
Slump in peso transfers
Chanco also pointed out that the “pre-COVID-19 slump in fund transfers in peso terms remains intact” even as their dollar value already returned to prepandemic levels. As of end-June, cash remittances rose 6.4 percent to $14.92 billion from $14.02 billion last year when global borders were closed to contain the spread of the deadly coronavirus. It was also higher than the $14.64 billion recorded in the first six months of 2019.
He said the long-term outlook was still dim, given the “long-running decline in the number of overseas workers.”
To date, the government repatriated over 600,000 overseas Filipino workers who lost their jobs due to the pandemic, the Department of Labor and Employment said this week.