March remittance growth slowest in nine months

MANILA, Philippines — Money sent home by Filipinos abroad posted its slowest growth in nine months in March as expats also grappled with high inflation and potential economic slowdown in their host countries.

Cash remittances coursed through banks rose by 2.5 percent year-on-year to $2.74 billion, the Bangko Sentral ng Pilipinas (BSP) reported on Wednesday.

That growth was softer than the 3 percent expansion recorded in February. At the same time, data showed the March uptick was the slowest since June 2023.

Ma. Ella Oplas, economist at De La Salle University in Manila, said inflows slowed as Filipino migrants tightened their belts to weather high inflation in their host countries.

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“People are saving for the rainy days,” Oplas said, adding that seasonality also partially played a role in the slowdown.

“There are no major household expenses in March, so there was less demand for remittances,” she said.

Remittances are a major source of purchasing power in the Philippines, where consumption typically accounts for 70 percent of gross domestic product. This is especially true today as stubbornly high inflation and expensive borrowing costs continue to squeeze household budgets.

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Government data showed growth in household spending eased to 4.6 percent in the first quarter—the weakest reading since the 4.8 percent contraction at the height of the COVID-19 pandemic in the first quarter of 2021.

That, in turn, held back the first quarter GDP growth to 5.7 percent, which fell short of the Marcos administration’s 6 to 7 percent target range.

Rebound

Data showed the March slowdown tempered the first quarter remittances growth to 2.7 percent to hit P8.22 billion. Inflows from the United States, Saudi Arabia, United Arab Emirates, and Singapore contributed mainly to the growth.

The central bank projects a 3-percent increase in remittances this year.

For Oplas, remittances would likely rebound in the coming months especially in June, when inflows are seasonally high to pay for school tuition fees and provide capital to family members in the countryside for the planting season. —Ian Nicolas P. Cigaral