Remittances drop 4.5% in June on weak labor demand

peso-dollar

Manila, Philippines – Money sent home by Filipino migrant workers declined in June, largely on the back of labor issues, particularly in the Middle East, the Bangko Sentral ng Pilipinas (BSP) reported on Wednesday.

Cash remittances coursed through banks in June declined by 4.5 percent to hit $2.357 billion during the month.

The volume of the dollars sent home by overseas Filipino workers (OFWs) in June was $112 million lower than the previous month’s aggregate cash remittances and $110 million short of the remittances in June 2017.

The OFWs’ inflows in June brought the total cash remittances for the  first half of the year to $14.179  billion, 2.7 percent larger than the $13.813 billion.

The government projects remittances to grow by 4 percent on average for the entire 2018. This means that remittances must grow an average of 5.3 percent for the next half of the year to reach the government projection.

The BSP  said the countries that registered the biggest declines in cash remittances during the month are the United Arab Emirates (UAE), Saudi Arabia and Kuwait.

“The overseas Filipino workers’ repatriation program of the government may have partly affected the remittance flows  for the month,” BSP Governor Nestor A. Espenilla Jr. said in a statement on Wednesday.

During the first two months of 2018, a total of 4,149 OFWs were repatriated from the UAE, Saudi Arabia and Kuwait.

The BSP also cited Philippine Overseas Employment Administration (POEA) data, showing that the number of deployed land-based workers dropped by 3.28 percent year-on-year, while that of sea-based workers fell by 14.62 percent.

This is the second time the remittances contracted on a monthly basis for this year. In March, the remittances declined by 9.8 percent. Economists blamed the weaker peso for the month’s decline.

Filipino migrant workers are usually seen to adjust their transfers based on the strength or weakness of the peso, with a weaker peso allowing them to send fewer dollars due to its increased peso purchasing power.

For June, while remittances in dollar terms declined, its peso value remained higher than in June last year.  In particular, in June 2017—when the peso traded at 49.85 to a dollar on average based on BSP data—the $2.467-billion cash remittances translated to P122.98 billion.

For this year, however, the $2.357-billion cash remittances in June translate to P125.03 billion with the 53.05 to a dollar average exchange rate for the month based on BSP data.

For the first six months of the year, cash remittances coming from the United States, Saudi Arabia, Singapore, United Kingdom (UK), UAE, Japan, Qatar, Germany, Hong Kong and Canada accounted for more than 79 percent, BSP data showed.

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