The global remittance market is estimated to reach $901.4 billion in revenue this year and is expected to grow by 6 percent yearly over the following five years, according to a new forecast from Research and Markets.
By 2027, the Ireland-based research firm sees the cross-border, person-to-person transfer of funds racking up revenues of $1.2 trillion.
Such growth is expected to be driven by increasing transactions; reduced remittance cost and transfer time; an increase in mobile-based payment and internet banking channels; and the shift in flow from cash to digital, and from informal to formal channels.
On the other hand, the lack of awareness about digital transactions is seen restraining the global growth of remittances.
Research and Markets observes that technological innovation in digital remittance, along with the growing significance of inflows as external financing for low- and middle-income countries, is creating opportunities in this market.
But the growing incidence of financial fraud is also creating risks in the remittance market, it warned.
On Tuesday, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said inflows from overseas-based Filipinos has been helping to keep the Philippines’ external position strong.
In turn, a strong external position has been a key strength of the Philippine government’s credit standing, and has been inspiring investor confidence related to the country.
“Remittances from overseas Filipinos registered a 5.1 percent growth in 2021,” Diokno said. “At the height of the pandemic in 2020, they only contracted by less than one percent.”
As of March, the latest forecast by the Monetary Board puts the growth of inbound remittances at 4 percent in 2022 as well as 2023.
This means remittances might reach new record highs. In 2021, inflows reached a record $34.9 billion, of which 90 percent of $31.9 billion was sent through banks.
Over the past 10 years, personal remittances grew by an average of 5.7 percent yearly. But considering the increasing base, Diokno said it was now difficult to reach annual growth rates of 5 percent or more.
According to the BSP, key factors that are fueling growth of remittances include the increased global demand for overseas Filipino workers, particularly those skilled in jobs related to medical and health services, as well as construction and housekeeping.