Philippines: Growth in remittances ebbs in October
December 15, 2020
Remittances summed USD 2.7 billion in October, representing a 2.9% year-on-year expansion. This follows September's 9.3% year-on-year expansion. On a 12-month moving average basis in October, remittances amounted to USD 29.9 billion, above the USD 29.8 billion recorded in September. October’s 12-month rolling total signaled a 0.4% decline from a year earlier (September: flat reading).
Commenting on the solid performance of remittances in recent months was Nicholas Mapa, senior economist at ING:
“Remittance flows contracted by 19.3% in May but have since stabilized, posting growth for four out of the last five months. Remittances managed to expand despite the repatriation of more than 300,000 OFs who were sent home after job losses in their host countries. The surprising resilience of remittances in the face of the pandemic may be traced to the appreciation trend of PHP […]. Funding the Philippine domestic consumption needs of their families, OFs may have been forced to compensate for the dollar’s relative weakness against PHP by sending home more remittances in dollar terms.”
For the remainder of the year, the impact of the strong peso could be partially offset by tighter restrictions globally. Next year, remittances should strengthen in tandem with labor markets abroad, which should feed through to stronger private consumption at home.