For the Philippines, remittances are among the significant growth drivers of the economy—accounting for roughly 9% of annual domestic output. However, remittance from overseas Filipino workers (OFWs) this year has been further reduced to 2% by Philippine monetary officials due to the impact of the COVID-19 global pandemic.
In a Viber message to journalists on Friday, May 15, Bangko Sentral ng Pilipinas Governor Benjamin Diokno said the initial projection of 3% has been slashed to 2.2 – 2.8 percent or an average of 2.5 percent last March.
He noted that the earlier cut was made after monetary executives earlier forecasted about 2-8% contraction of remittances from the original target.
“To be on the conservative side, BSP adopted an amended forecast of two percent, which is less than 2.5 percent. That’s BSP’s latest forecast,” he said.
As a result of the impact of the coronavirus disease 2019 (Covid-19), thousands of OFWs have been repatriated after losing their jobs overseas.
Diokno noted that “the government has now allowed OFWs to leave the country, except health workers who are most needed at home.” This in turn, is seen to be a good indicator of the remittance inflows, which already posted slower growth last February.
Data released by the central bank Friday showed a 2.5% annual expansion of cash remittances last February to USD2.358 billion, slower than the 6.6%t growth for the previous month of January.
However, Diokno noted that the average remittances to date has grown by 5.6% year-on-year.
“Of course, BSP will continue to closely monitor the level of remittances sent by Filipino overseas workers in addition to other inflows of foreign currencies. And we will continue to release monthly data on such foreign trade and incomes numbers,” he said.
Total cash remittances to the Philippines grew by 4.1% to USD30.133 billion in 2018, higher than the 3% forecast.