September 17, 2024 | 12:00am
MANILA, Philippines — Remittances from overseas Filipino workers (OFWs) increased by 3.2 percent to $3.43 billion in July, hitting its highest level in seven months, the Bangko Sentral ng Pilipinas (BSP) said.
Latest data released by the central bank showed personal remittances in July were about $107 million higher than the $3.32 billion a year ago. It marked the largest since the $3.63 billion in December 2023.
“The growth in personal remittances in July 2024 was due to higher remittances sent from land-based workers with work contracts of one year or more, and sea- and land-based workers with work contracts of less than one year,” the BSP said in a statement.
Remittances from OFWs with contracts of one year or more inched up by 3.4 percent to $2.72 billion in July from $2.63 billion in the same month last year, while that of workers with contracts of less than one year grew by 1.7 percent to $630 million from $620 million.
Rizal Commercial Banking Corp. chief economist Michael Ricafort said the high OFW remittances in July was due to tuition payments and other related spending in preparation for the start of the new school year.
According to Ricafort, the consistent growth in remittances could be attributed to higher commodity prices that require sending more money to augment the needs of OFWs’ families back home.
“Cash remittances from OFWs have hit a new high. This surge is likely due to factors like economic recovery and improving sentiment, tempering inflation, and improved remittance channels,” Security Bank chief economist Robert Dan Roces said.
In the January to July period, the sum of net compensation of employees, personal transfers and capital transfers between households rose by three percent to $21.53 billion from $20.91 billion a year ago.
Of the total, cash remittances coursed through banks grew by 2.9 percent to $19.33 billion from last year’s $18.79 billion.
The BSP said the growth in cash remittances from the United States, Saudi Arabia and United Arab Emirates mainly contributed to the increase in remittances from January to July.
In terms of country sources, the US posted the highest share of overall remittances during the period with 41.1 percent, followed by Singapore (6.9 percent), Saudi Arabia (six percent), Japan (five percent), the United Kingdom (4.9 percent), United Arab Emirates (4.2 percent), Canada (3.5 percent), Qatar (2.8 percent) and South Korea and Taiwan (2.7 percent each).
For July alone, cash remittances increased by 3.1 percent to $3.09 billion from $2.99 billion in the same month last year. This was also the highest since the record monthly high of $3.28 billion in December 2023.
For the coming months, Ricafort said remittances could continue to grow as dependents need to cope with still-elevated prices in the Philippines.
However, the risk of economic slowdown or even recession in the US, as well as in other countries that host large numbers of OFWs, would be a drag for remittances especially if there would be job losses for some migrant Filipinos, Ricafort added.
The BSP forecasts both personal and cash remittances to grow by three percent this year.
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