Remittance inflows from overseas Filipino workers (OFW) are expected to resurge around Christmas after the first dip recorded in August, with both government and private economists confident about sustained global demand for Filipino workers’ skills and the deferment of a US Federal interest rate hike.
Private analysts see no significant impact from the drop in remittances in August on the economy, saying the inflows are likely to recover in the coming months given the traditional peak season during the Christmas holidays.
Focusing on the rise in cash remittances, Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo said the central bank projects a 5-percent increase in these funds coursed through banks.
“I believe remittances will continue to be stable at around 5 percent for 2015,” Guinigundo said in a text message to reporters on Friday.
He said the BSP continues to see robust deployment of OFWs to different regions and territories.
“Filipino skills remain in big demand. Despite soft global growth, OFWs continue to find opportunities because of their diversified skills and competencies,” he said.
“In fact, in the last quarter of the year . . . we expect renewed heavy inflows because of the holidays,” Gunigundo added.
In August, personal remittances slipped 0.8 percent year-on-year, the first time since the central bank began releasing the relevant data in 2012. Cash remittances dropped 0.6 percent in August, the first since a 10.2 percent fall in April 2003. The BSP attributed the drop in remittances to the depreciation of some currencies against the US dollar, which reduced the dollar equivalent of remittances sent from host countries.
“I expect the euro and the yen to strengthen against the US dollar and so, we can expect a rebound [also in the peso remittances],” he said.
Abola pointed to seasonal factors and delays in the US Federal rate hike as reasons for the expected recovery in remittances.
Bank of the Philippine Islands (BPI) associate economist Nicholas Antonio Mapa traced the August fall in remittances to external dynamics such as the dollar’s strength relative to other major currencies.
“The DXY or dollar index was at 95 in August 2015 while it was only at 83 in the same month last year. This means that the [US] dollar was roughly 14.5 percent stronger this year, making any remittances sent home in other currencies ‘watered down.’”