The Bangko Sentral ng Pilipinas (BSP) is hoping cash remittances will increase more than three percent for 2023 and 2024 amid lingering uncertainties surrounding a global economic slowdown this year.
The BSP earlier announced that it only expects an annual remittances growth of three percent for the next two years compared to previous years’ four percent projection.
“The foreseen economic slowdown poses a key concern on job quality, as workers may have to accept poorly paying jobs, which, when coupled with inflation, could significantly reduce incomes,” said the BSP in an email to Manila Bulletin.
The BSP cited a World Bank data that said remittances will only grow by two percent this year compared to a four percent estimate growth for 2022.
“Nonetheless, the BSP’s OF (Overseas Filipinos) remittances growth forecast of 3 percent for 2023 is higher than World Bank’s 2 percent growth forecast, as the OF remittances have proven to be quite resilient, and even exceeded third party forecasts, during past crisis episodes,” said the BSP.
The BSP cited as example the country’s remittances performance in 2020, at the height of the pandemic, when remittances declined by only 0.8 percent. “(It fared) better than the World Bank’s estimate of a five-percent decline for the period,” said the BSP. The central bank had expected remittances to decline by two percent in 2020.
The BSP said that the lower projection for remittances in the next two years are “primarily consistent” with the actual 2022 results. Last year, overseas Filipinos sent home $32.54 billion remittances which was 3.6 percent higher compared to $31.42 billion in 2021.
“The outlook likewise considers expectations of moderated employment and migration conditions on account of the projected global slowdown,” it added.
The BSP also pointed out that the reduced capacity of migrants to remit this year and in 2024 was because of recession-induced job losses in affected countries.
It likewise argued that the lower projection is consistent with the most recent third-party assessment of global remittance flows over the near term.
Aside from the World Bank’s modest growth estimates for remittances, the International Labour Organization also projects growth in global employment to drop to about one percent this year with a “less optimistic outlook for high-income growth countries,” noted the BSP.
As of end-March this year, cash remittances grew by three percent year-on-year to $8 billion from $7.77 billion same time in 2022. Remittances are sent home by both land- and sea-based workers.
The central bank reports monthly cash and personal remittances. While cash remittances are sent through the formal banking system, personal remittances which are computed as the sum of an overseas Filipino’s net compensation, are sent as personal transfers and capital transfers between households.
Personal remittances rose by three percent year-on-year to $8.9 billion as of end-March versus $8.65 billion same time in 2022.
During the first quarter, overseas Filipinos based in the US, Singapore, Saudi Arabia and the United Arab Emirates contributed mainly to the increase in remittances.