MANILA, Philippines – Inward remittances to the Philippines posted their biggest jump in over 8 years in November last year, following the US election victory of Donald Trump, who threatened to send the 10 million undocumented immigrants back to their countries.
Latest data from the Bangko Sentral ng Pilipinas (BSP) showed that remittances spiked by 18.5% to $2.22 billion in November, the fastest growth since July 2008 and a rebound from the 2.8% decline posted in October 2016. (READ: Remittance growth in November fastest in 8 years)
This brought the remittances level for the period January-November 2016 to $26.9 billion, representing a growth of 5.1% year-on-year.
Economists attribute the spike to a number of factors, including possibly as a response to Trump’s anticipated protectionist policies.
Filipinos living in the US are still the biggest source of remittances, sending back home a total of $8.067 billion in the first 11 months of 2016. This accounts for about a third of the total remittance figure. (READ: Come home, PH gov’t urges undocumented Filipinos in U.S.)
“Front-loading of cash transfers ahead of Mr. Trump’s likely protectionist policies could be one of the reasons for November’s surge in remittances, but its impact might probably be minimal,” Guian Angelo Dumalagan, market economist at Land Bank of the Philippines, said in an e-mail.
Transfers from the US increased by about 28% year-on-year in November, but according to Dumalagan, this sharp rise might partly be a result of 2015’s very low base. (READ: 5 ways a Trump presidency could affect Filipinos)
“OFs (Overseas Filipinos) may have capitalized on the notable USD gain in November. They could have sent more than the usual amount. We hope it is not a sign that OFs are anticipating tighter immigration policies and are sending their savings, not just their current incomes, already,” Emilio Neri Jr., lead economist at the Bank of the Philippine Islands (BPI), said in an e-mail reply.
“It’s very hard to make a firm assessment on that [Trump’s impact]. I know though that there is no legislation needed to tighten immigration in the US. Donald Trump just has to be stricter in implementing its existing laws,” he added.
Other reasons for the surge, Dumalagan said might be brought about by higher spending needs in preparation for the Christmas season and the depreciation of the peso.
The peso depreciation “might have also enticed OF workers to send their money home, as lower peso rates would allow them to convert each dollar to more units of the local currency,” he added.
Other than these factors, Mapa said that it is “also very possible that OFs from oil exporting economies are getting paid on time given the favorable global oil price movements that month.”
Full-year target ‘doable’
Looking forward, the BPI lead economist said the central bank’s forecast for the year is “doable,” as remittances were likely to increase in time for the holidays.
Dumalagan said, “The full-year target of $26.3 billion for 2016 is within reach, as December 2016’s remittances are expected to be at least as high as December 2015’s level of $2.470 billion.”
He added that remittances usually rise in December to reach its highest monthly level during the year.
“This trend is true since at least 2011. Higher financial requirements during the Christmas season may have fuelled last month’s rise in OFW remittances. In the fourth quarter, OFW remittances likely contributed to stronger consumer spending,” Dumalagan said. – Rappler.com
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