Remittances remain resilient and continue to be a major engine of economic growth despite the return of about half a million overseas Filipino workers to the Philippines since 2015, Hongkong and Shanghai Banking Corp. said in a report Friday.
“Skilled OFWs are gradually returning home: roughly half a million of them since 2015. This, of course, is a welcome development; with the Philippines being one of the fastest-growing economies in Asia over the past decade, more Filipinos may have decided to take their chances and earn a living back home,” the bank said.
HSBC said the reversal of overseas worker deployment could change the macroeconomic fundamentals of the archipelago.
“And, indeed, some of these fundamentals have started to change. For instance, remittances in US dollar terms have been slowing since 2015. Although the contribution of remittances to current account receipts is still robust, it has softened considerably compared to the highs of 2014-15 when OFW deployment peaked,” it said.
The bank said unless OFW returnees were employed in export-related jobs back home, the current account would likely see a wider deficit, with OFWs remitting less foreign currency than before.
“Ironically, what didn’t change is the fact that remittances continue to fuel consumption in the economy, supporting growth and bolstering the archipelago’s resilience,” HSBC said.
“Due to a weaker peso against the US dollar, remittances in PHP terms are growing by double digits, while remittances as a percent of GDP remain robust,” it said.
The Bangko Sentral ng Pilipinas earlier retained its 3-percent growth projection for remittances this year, downplaying the impact of the Israel-Hamas conflict on the total volume of inflows.
Data from the BSP showed that remittances from OFWs working in Israel reached $66.7 million from January to July this year, or 0.5 percent of the total remittances in the period. Remittances from Israel reached $110.6 million or 0.3 percent of the total in 2022. About 30,000 Filipinos were working in Israel.
Cash remittances rose 2.6 percent $2.91 billion in September and 2.8 percent to $24.49 billion in the first nine months of 2023.