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Friday, June 14, 2024

Economist expects remittances to sustain growth as more countries that host OFWs recover from crisis

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Remittances are expected to improve in the coming months as global economies continue to recover from the health crisis, an economist said over the weekend.

“OFW remittances could improve further in the coming months that support the country’s economic recovery prospects from COVID-19, as the global economic recovery would still improve further as more countries, especially those that host large numbers of OFWs around the world would reach population protection/herd immunity in the coming months, fundamentally entailing the creation of more job/employment opportunities for OFWs,” said Rizal Commercial Banking Corp. chief economist Michael Ricafort in a report.

“The continued year-on-year growth in OFW remittances has been somewhat defying the pandemic, as some OFWs are economic and medical frontliners as well as essential workers in various host countries worldwide, especially those with aging populations, thereby a sign of resilience/bright spot/greenshoots,” he said.

Data from the Bangko Sentral ng Pilipinas on Friday showed that cash remittances in May increased 1.8 percent to $2.43 billion from $2.38 billion a year ago. This brought cash remittances in the first five months to $12.59 billion, up by 2.5 percent from $12.28 billion recorded in the same period last year.

Personal remittances, which include non-cash items, reached $2.70 billion in May, or 2 percent higher than $2.65 billion posted in the same month last year. This resulted in the 2.5-percent increase in personal remittances to $14.02 billion in the first five months from $13.68 billion a year earlier.

Ricafort said the Philippines was the fourth biggest destination of remittances in the world, next to India, China and Mexico. He said the Philippines is also among the biggest suppliers of nurses accounting for at least 20 percent globally and the biggest supplier of seafarers representing about 20 percent to 25 percent of the total.

“The aging population in some developed countries also structurally increased the demand for OFWs in recent years, especially amid tighter labor markets in some host countries due to faster economic recovery prospects,” he said.

Cash remittances hit a record $31.418 billion in 2021, up 5.1 percent from $29.903 billion in 2020.

Remittances were equivalent to roughly 8 percent to 9 percent of nominal gross domestic product; 32 percent to 37 percent of income from exports of goods and services; and 26 percent to 37 percent of gross international reserves.

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