Remittances growth slows in July

Cash sent home by migrant workers in July grew at the slowest pace in six months as the dollar’s recent strength brought down the value of remittances denominated in other currencies.

In a statement, the Bangko Sentral ng Pilipinas (BSP) said remittances from overseas Filipino workers (OFWs) grew by 0.5 percent to $2.08 billion.

The growth was slower than June’s 6.1 percent and the total for the month was the lowest since April. For January to July, remittances totaled at $14.2 billion, up 4.8 percent year-on-year.

Officials attributed the slowdown to “the depreciation of currencies in OFW host countries against the US dollar, which reduced the dollar equivalent of their currencies.”

Remittances from OFWs account for nearly a tenth of gross domestic product (GDP). These cash transfers are seen as a strong driver for consumer spending that makes up two-thirds of domestic output.

It also forms the biggest component of the economy’s current-account surplus, or a summary of all recurring forms of foreign exchange income for the country. This surplus ensures the steady supply of dollars in the economy to cover the money needed to pay for imports.

Main sources of remittances in July were the United States, United Arab Emirates, United Kingdom, Singapore, Japan, Hong Kong and Canada.

Dutch financial giant ING Bank yesterday said the Philippines was slowly weaning itself off remittances from migrants, thanks to the success of the business process outsourcing (BPO) industry, which employs more than a million Filipinos.

“[OFW remittances are] practically only half of the strong structural inflows. Outsourcing revenues are expected to remain strong and post an annual growth of 15 to 17 percent this year,” ING Bank economist Joey Cuyegkeng said.

For the entire year, the BSP expects remittances to grow by 5 percent to a record high of $25 billion.