OFW remittances reached $31.59B as of Nov 2021, up 5.3%

The inflow of US dollars from overseas Filipino workers (OFWs) is shoring up the Philippines’ external position, with personal remittances growing 5.3 percent year-on-year in the 11 months ending Nov. 30 last year.

The Bangko Sentral ng Pilipinas (BSP) said January to November remittances reached $31.59 billion in 2021 from $29.99 billion in the same period of 2020.

In November alone, the BSP observed a 4.8-percent growth with an inflow of $2.77 billion compared to $2.64 billion in the same month of the previous year.

Work contracts

Transfers from land-based OFWs with work contracts of at least one year reached $2.14 billion or 6.3 percent higher than $2.01 billion previously.

Current account deficit

Latest data from the BSP show that from January to September last year, the country’s current account was pegged at a deficit of $2.6 billion compared with a surplus of $7.8 billion in the same period of 2020.

“However we expect the [remittances] contribution to be outweighed by the increase in imports of capital goods and travel services (as borders reopen), resulting in the widening of the current account deficit,” Koh said.

Nicholas Mapa, ING Bank senior Philippines economist, said in a research note a steady dose of OFW remittances and business process outsourcing receipts has helped support the peso throughout most of 2021, when the local currency depreciated like most in the region.

“We can expect these two structural types of flows to continue to flow in 2022, helping steady the [peso] yet again,” Mapa said.

“However, we expect external events to overtake real sector flows as the Fed [United States Federal Reserve] prepares its eventual rate liftoff this year,’ he added. “Remittances and BPO receipts will likely be relied on heavily to steady the currency.”