2015 growth expected at 4%, revised down from 5%
The Bangko Sentral ng Pilipinas has trimmed its remittance outlook for the year, citing the impact of a stronger dollar and a “de-risking” in major markets aimed at curbing illicit money transfers.
Over the weekend, the central bank said it was revising its 2015 growth forecast for cash remittances from overseas Filipino workers (OFWs) to 4 percent from 5 percent.
In value terms, cash remittances are projected to reach $25.3 billion this year from the $24.3 billion recorded last year.
The new 4 percent growth forecast is lower than the 5.9 percent recorded last year. As of October, growth was at 3.7 percent, with the ten-month tally hitting $20.64 billion.
“The growth of overseas Filipinos’ remittances in 2015 is seen to decline slightly from 5 percent to 4 percent with the continued dollar appreciation relative to the currencies of major host countries,” central bank officials said.
Analysts have also blamed a stronger dollar for a recent slowdown in cash remittances, especially when the growth of funds coursed through banks dropped by 0.6 percent year-on-year in August–the first time since the central bank began releasing relevant data in 2012.
Besides the stronger dollar, the central bank also pointed to the “de-risking” by authorities in major markets in the global effort to curb money laundering and terrorist financing.
“There are a number of reasons why there seems to be a slowdown in the remittances. [One is the] de-risking of those major markets,” central bank Deputy Governor Diwa Guinigundo said.
He explained that the drive against terrorist financing and money laundering had prompted banks in major markets to enforce strict compliance with remittance rules. This, Guinigundo said, has led to some migration of remittances to money transfer operations from banks.
Nevertheless, the central bank remains optimistic that remittances will remain strong on the back of strong consumer spending and continued deployment of OFWs worldwide.
“Continued remittances of overseas Filipinos are still expected on account of the steady deployment of OF workers, greater diversification of country destinations and shift to higher-skilled type of works,” the central bank declared.
Last week, it reported that remittances had lost pace in October following a September rebound.
Cash remittances—money sent through banks—slowed to 0.2 percent in October to $2.23 billion, easing from a 4.3 percent growth a month earlier.
Personal remittances—representing overseas Filipinos’ earnings, personal transfers in cash or in kind and capital transfers between households—grew by an identical 0.2 percent to $2.47 billion from a year earlier.
In August, personal remittances also saw its first decline – an 0.8-percent contraction – since the central bank began began releasing remittance data.
Year to date, growth in personal remittances eased to 3.5 percent in October from 3.9 percent a month earlier. The 10-month tally rose to $22.83 billion.
The United States, Saudi Arabia, the United Arab Emirates, Singapore, the United Kingdom, Japan, Canada and Hong Kong were the major sources of cash remittances for the period.