FILIPINO migrant workers are expected to send in more money towards the end of the year, providing more support for domestic spending and economic recovery for the remainder of the year, a local economist said.
In his latest research analysis, Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort said overseas Filipino workers’ (OFW) remittances will continue to rise in the last three months of the year due to two things: seasonality and further normalization of the global economy from the disruption brought about by Covid-19.
“OFW remittances and conversion to pesos are expected to seasonally increase in the fourth quarter especially towards the Christmas season, as consistently seen for many years, thereby could support faster growth in consumer spending,” Ricafort said.
Consumer spending accounts for at least 70 percent of the economy. Ricafort said the increase in remittances would also support economic recovery prospects and will be a “major pillar” for the country’s economic recovery program.
“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 herd immunity in the coming months, fundamentally entailing the creation of more job/employment opportunities for OFWs,” Ricafort said.
The economist also said the further re-opening of the economies worldwide would present more opportunities for growth in OFW remittances as massive vaccination of many host countries, some of which are nearing herd immunity, would allow the re-opening and greater capacity for many businesses/industries, especially the hardest-hit ones such as tourism, travel, leisure, entertainment, among others since the pandemic,” Ricafort said.
Overall, the higher remittance volume expected towards the end of the year will provide support to the country’s balance of payments (BOP) and gross international reserves (GIR), the economist said.
“[It] would also fundamentally provide greater support or cushion for the peso exchange rate especially vs. any speculative attacks,” he added.
The Philippine remittances from overseas workers have consistently been the fourth largest in the world after India, China, and Mexico.
According to the latest data released by the Central Bank, cash remittances grew 5.2 percent in September this year from the same month last year, sending about $2.74 billion back to the Philippine economy during the month.
The September remittance performance brought the total OFW cash remittance to the Philippines to $23.12 billion in the first nine months of the year. This is 5.6 percent larger than the $21.89 billion in the same January-to-September period in 2020.
Image courtesy of Nonie Reyes
OFW remittances will keep rising till year-end
Source: News Paper Radio
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