MONEY sent home monthly by overseas Filipinos posted a new high in December – the Christmas season – bringing the total 2016 tally above the target set for the full year by the central bank.
Personal remittances rose 3.6 percent to $2.82 billion in December from $2.72 billion a year earlier, data from the Bangko Sentral ng Pilipinas (BSP) showed on Wednesday.
Although the increase for December slowed sharply from the 18.4 percent year-on-year rise in November, the nominal value of remittances in December reached a new record, the BSP said.
The December 2016 remittances level broke the previous record high of $2.72 billion posted in the corresponding month in 2015.
As a result, total personal remittances for 2016 rose 4.9 percent year-on-year to $29.7 billion, exceeding the projected growth rate of 4 percent by the BSP for the year.
The increase in December remittances came largely from land-based Filipino workers overseas. Growth in cash remittances from the Middle East, Asia and the Americas offset the decline recorded in Europe.
“Growth in personal remittances was steered by the 7.6 percent expansion in remittances from land-based workers with work contracts of one year or more, which totaled $23.2 billion. This made up for the 3.7 percent decline in remittances from sea-based and land-based workers with work contracts of less than one year to reach $6.1 billion,” the BSP explained.
A private analyst said remittances in December reflect the holiday season – a time when Filipinos abroad send more money for their families in the Philippines.
“This period covers the fourth quarter [of 2016]and the year-end holidays, which are traditionally a ‘remittance’ and ‘homecoming’ season for OFWs,” Justino Calaycay Jr., marketing and research head at A&A Securities Inc., said.
Cash remittances coursed through banks totaled $2.55 billion in December, up 3.6 percent from $2.47 billion in December 2015. In November, cash remittances totaled $2.21 billion.
Full-year 2016 cash remittances posted growth of 5 percent to reach $26.9 billion, up from $25.6 billion a year earlier.
The BSP said the increase in 2016 cash remittances was driven by the $21.3 billion transfers from land-based workers, which grew by 7.6 percent year-on-year. Meanwhile, sea-based workers remittances dropped by 3.8 percent to $5.6 billion.
“This may have been due partly to stiffer competition in the supply of seafarers, particularly from East Asia and Eastern Europe,” the BSP report said.
The BSP added that cash remittances in 2016 rose also on the back of improving global economic conditions.
Remittances from the Middle East grew 12.7 percent, boosted by higher remittances from Qatar, Kuwait, Oman and the United Arab Emirates (UAE).
Remittances from Asia rose 7.4 percent, buoyed by transfers originating from Singapore, Japan, China, and Taiwan. For the Americas, which increased by 3.8 percent, the major contributor was the 6.2 percent rise in remittances from the US.
Meanwhile, remittances from Europe fell by 8.4 percent, owing to the decline in cash transfers from the United Kingdom (UK)–partly due to the depreciation of the pound sterling vis-a-vis the US dollar —Italy and the Netherlands.
By country source, more than 80 percent of the total remittances came from the US, Saudi Arabia, UAE, Singapore, UK, Japan, Qatar, Kuwait, Hong Kong, and Germany, the BSP said.
“The solid growth in OF remittances continues to be a major driver of domestic demand. In 2016, personal remittances represented 8.1 percent of the country’s gross national income (GNI) and 9.8 percent of gross domestic product (GDP),” it added.
Moderate growth seen
Joey Cuyegkeng, senior economist for ING Bank Manila, said uncertainty over the possible effects of the trade, immigration and jobs policies of the new US administration may keep OFW remittances growth at a moderate pace of 4 percent this year, or slower than the 4.9 percent and 5 percent growth in personal and cash remittances in 2016.
“Such [US] policies may generate downside risks,” he warned.
Nevertheless, Cuyegkeng added, the health of host economies is likely to improve but the improvement may be seen later in the year or in 2018.
“Oil prices have increased from the lows of early 2016 and are likely to rise by about 20 percent to 25 percent year-on-year,” he explained.
Given this, he said growth in developed markets is expected to be mild or show a gradual improvement.