Slower Growth in Overseas Remittances Reflects Global Economic Headwinds

Strategic Insights -

The money sent home by Filipinos overseas grew by 2.9 percent year-on-year in May, reaching $2.66 billion, according to the Bangko Sentral ng Pilipinas (BSP). This marked a slowdown from the 4-percent annual expansion in April, but still better than the BSP's projection of 2.8 percent growth for the year. The May result pushed the five-month remittances to $13.77 billion, up by 3 percent. The United States remained the top source of remittances, accounting for 40.2 percent, followed by Singapore and Saudi Arabia.

Key Takeaways:

  • The money sent home by Filipinos overseas grew by 2.9 percent year-on-year in May, reaching $2.66 billion.
  • The growth in May was slower than the 4-percent annual expansion in April and below the BSP's projection of 2.8 percent growth for the year.
  • The five-month remittances amounted to $13.77 billion, up by 3 percent.
  • The United States remained the top source of remittances, accounting for 40.2 percent, followed by Singapore and Saudi Arabia.
  • A strong peso that traded at the 55 level may have helped drive remittance growth in May, as it can cut the peso-equivalent of remittances and prompt expats to send more money.
  • Some of the cash transfers may have gone to vacation spending, tuition payments, and other new school year-related expenses.
  • Despite the slowdown, remittances remain a bright spot for the overall economy as an important growth driver, especially in terms of consumer spending.
  • Remittances could still sustain a 3-percent growth, especially if Filipino migrant workers can tap other labor markets and if the country can increase the adoption of digital payment products.

Statistics:

  • The money sent home by Filipinos overseas grew by 2.9 percent year-on-year in May, reaching $2.66 billion.
  • The growth in May was slower than the 4-percent annual expansion in April.
  • The BSP projects remittances to grow by 2.8 percent to $35.5 billion this year.
  • The five-month remittances amounted to $13.77 billion, up by 3 percent.
  • The United States accounted for 40.2 percent of remittances.
  • Singapore accounted for 7.4 percent of remittances.
  • Saudi Arabia accounted for 6.4 percent of remittances.
  • The strong peso traded at the 55 level in May.

Sources:

  • "BSP: May remittances up 2.9% y-o-y" by Philippine Daily Inquirer, citing Bangko Sentral ng Pilipinas (BSP)
  • Commentary by Michael Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC)
  • Commentary by Jonathan Ravelas, senior adviser at Reyes Tacandong and Co.