A slowdown in remittances from overseas Filipino workers (OFWs) in Europe, Asia and the Middle East may put the country’s current account surplus at risk in the first six months of the year, a Standard Chartered Bank researcher said.
In a recent report, StanChart Asia economist Jeff Ng said remittances likely slowed down in March from a month earlier given the lower inflows coming from the said regions.
Ng said remittances may have grown 3.3 percent year-on-year as compared to the 4.2 percent recorded in February.
The central bank is expected to release the official remittances figure on Friday.
Cash remittances, or those coursed through banks, rose 4.2 percent year-on-year to $1.87 billion in February from $1.80 billion a year earlier, marking a rebound from the 0.5 percent slow growth in January.
“Remittance growth has slowed in recent months—they grew 4.6 percent year-on-year on average in the past six months, slower than 6.1 percent year-on-year in the previous six months,” Ng explained.
“We also see downside risks in the near term as remittances from Europe, Asia and the Middle East decline,” he added.
The StanChart economist stressed that an increase in remittance inflows is expected only in the second half of 2015 as stronger US growth improves remittance flows.
With this, slower remittance growth may translate into a slight downside risk for the current account surplus in the first half, he pointed out.
In 2014, current account—a major component of the balance of payments—reached a record surplus of $12.6 billion, rising about 11 percent over an $11.4 billion surplus recorded in full-year 2013.
Current accounts consist of transactions in goods, services, primary income and secondary income, and measure the net transfer of real resources between the domestic economy and the rest of the world.