Remittances transferred via the banking networks grew by 5.1 percent to $31.418 billion in 2021 compared to $29.903 billion in 2020 but was off the expected six percent growth for the year, the Bangko Sentral ng Pilipinas (BSP) reported Tuesday, Feb. 15.
Cash remittance into the country was originally projected to grow five percent in 2021 but the BSP revised the projection in September last year and raised it to six percent on expectations of higher-than-anticipated recovery after contracting 0.8 percent in 2020 due to the pandemic.
One of the factors for the adjusted projection was because most of the advanced economies where Overseas Filipinos or OFs are located have started to recover and to open up for trade and investments. But despite not reaching the six percent growth forecast, the BSP said cash remittances last year was still a vast improvement from 2020. For this year, the BSP expects cash remittances to grow by four percent.
Last year, remittances increased due to higher receipts from land-based and sea-based workers, which rose by 5.6 percent to $24.873 billion from $23.55 billion, and three percent to $6.545 billion from $6.354 billion, respectively, said the BSP.
“Notwithstanding the global pandemic, cash remittances sent by OFs across various regions remained robust,” the BSP added.
In 2021, the inward remittances from the Americas grew by 7.1 percent, based on central bank data. Those from Europe went up by 5.5 percent, from Asia by 4.5 percent, and from the Middle East by 0.7 percent.
By country source, the BSP said cash remittances from the US accounted for the largest share of overall remittances at 40.5 percent followed by Singapore, Saudi Arabia, Japan, the United Kingdom, the United Arab Emirates, Canada, Taiwan, Qatar, and South Korea.
“The combined remittances from these top ten countries represented 78.9 percent of total cash remittances in 2021,” noted the BSP.
For the month of December 2021 only, cash remittances increased by 3.3 percent to $2.987 billion from $2.890 billion same period in 2020.
Meantime, the BSP said personal remittances in 2021 grew to an all-time high of $34.884 billion and up by 5.1 percent from $33.194 billion in 2020.
The difference between cash and personal remittances, as recorded by the BSP, is that the former are remittances course through the banks while the latter is the sum of net compensation of employees, personal transfers and capital transfers between households. The BSP, however, makes use of cash remittances to issue projections for any given year as these are easily captured by monitoring banks’ fund transfer activities.
For the month of December only, personal remittances rose by 2.9 percent to $3.298 billion which the BSP said was the “highest monthly level since the tracking of personal remittances data series began in 2005.”
“The sustained growth in personal remittances during the year was driven by remittances sent by land-based workers with work contracts of one year or more, which increased annually by 5.6 percent to $27.005 billion from $25.564 billion,” said the BSP.
Remittances of sea- and land-based workers with work contracts of less than one year also posted growth of 2.9 percent to $7.138 billion from $6.934 billion in 2020.
“The growth in personal remittances reflected a pickup in OFW (Overseas Filipino Workers) deployment, strong demand for OFWs amid the reopening of host economies to foreign workers, and the continued shift to digital support that facilitated inward transfer of remittances,” said the BSP.
“The strong inward remittances, in turn, contributed to the increase in domestic demand, with the 2021 level accounting for 8.9 percent and 8.5 percent of the country’s gross domestic product (GDP) and gross national income (GNI), respectively,” the BSP added.