Remittances up 3.5% in early 2022

Overseas Filipino Workers’ (OFW) remittances started the year strong, rising 3.5% year-on-year to $3.07 billion in January, Bangko Sentral ng Pilipinas (BSP) said Wednesday.

The result—up from $2.97 billion a year earlier—was attributed to higher remittances from onshore workers with contracts of a year or more, and offshore and onshore OFWs with contracts of less than a year.

Compared to an annual peak in December, when OFW money sent home traditionally rises due to the holidays, remittances fell 12 percent from a record $3.49 billion.

Remittances through banks also rose 3.5% to $2.76 billion from $2.67 billion a year earlier. This is again below the $3.16 billion recorded in December.

The expansion was also driven by rising incomes from land and sea workers, BSP said.

“Growth in remittances from the United States, Saudi Arabia, Japan and Singapore largely contributed to the increase in remittances in January 2023,” the central bank also said.

The United States accounted for the largest share (41.9 percent) of total remittances in January 2023, followed by Singapore (7.2 percent), Japan and Saudi Arabia (5.9 percent each).

The US seems to be the main source of remittances, not because it has the most OFW, but because it is the closest origin.

As explained by BSP, money transfer centers around the world usually process funds through correspondent banks located in the United States. In addition, funds sent via couriers cannot be disaggregated by country source, but are instead placed where the couriers’ main offices are located, which is again the US for many.

Comment received from Rizal Commercial Banking Corp. Chief Economist Michael Ricafort said remittances remain a “bright spot” but could slow down due to the global economic slowdown.

“OFW remittances, which are still at a record monthly high, are considered a bright spot for the Philippine economy in terms of stimulating/supporting consumer spending, which accounts for at least 75 percent of the economy, and in turn supporting a faster GDP (gross domestic product)/economic growth,” he added.

Rising prices, Ricafort continued, could also encourage Filipinos working abroad to send more money home.