Expectations for more hikes in the Federal Reserve’s key rates along with higher inflation overseas are seen to limit inflows of money being sent by Overseas Filipino Workers (OFW).
On Thursday, the Bangko Sentral ng Pilipinas (BSP) reported the 2.5 percent annual jump in total remittances sent by Filipino workers overseas last June to US$ 3.21 billion.
For the first half of the year, total remittances reached US$18.10 billion, up by 2.9 percent relative to the USD 17.59 billion in the same period in 2023.
Cash remittances last June rose by 2.5 percent to US$2.88 billion while the six-month level amounted to US$16.25 billion, up by 2.9 percent a year ago.
Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort dubbed modest the rise in remittances last June and traced this partly to the need for school-related expenses and summer vacation requirements.
He said the remittance inflows last June were the highest since the US$3.28 billion in December 2023.
For the coming months, he forecasts almost similar remittance growth “as OFW families/dependents still need to cope up with relatively higher prices/inflation locally.”
Ricafort, however, noted that among the factors that may likely limit OFWs from sending more money to their families include possible economic slowdown in the US or other OFW-host countries due to continued hikes in the Fed’s key rates.
He explained that the Fed’s decision to continue to manage inflation developments in the US and bring inflation rate back to its two percent target is a drag to OFW remittances, “especially if there would be job losses for some OFWs, though offset by the economic reopening in China, which is the world’s second biggest economy, since December 2022.”
“Nevertheless, the continued/sustained year-on-year growth in OFW remittances in recent months may also reflect faster economic recovery/rebound in some major host countries for OFWs around the world that has enabled more OFWs to work again,” he added.
