Beating forecasts: OFW remittances rise 7.6% in July 2020

Personal remittances from Filipinos abroad grew for the 2nd consecutive month, beating most analyst projections of another contraction amid the coronavirus pandemic.

Overseas Filipinos (OFs) sent $3.085 billion in July 2020, 7.6% higher compared to the $2.867 billion sent in the same month last year, latest data from the Bangko Sentral ng Pilipinas showed.

The higher figure narrowed the cumulative remittances contraction in January to July to 2.4%, which is equivalent to $18.658 billion.

"Most analysts had expected remittance flows to contract given challenging labor market conditions in host countries and given the fact that more than 170,000 OFs have returned to the Philippines over the course of the past few months," said Nicholas Mapa, ING Bank Manila senior economist.

Mapa also said the surprise jump in remittances may be traced to the lifting of strict lockdowns in host countries, which allowed Filipinos to return to work and remit funds after staying in their homes for an extended period of time.  

The surprise growth was attributed to the 12.6% increase in remittances from land-based workers with work contracts of one year or more, to $2.467 billion in July 2020 from $2.192 billion the same month a year ago. 

However, remittances from sea-based workers fell by 9.2% from $613 million posted a year ago to $557 million in July 2020, mainly due to the repatriation of sea-based workers affected by the pandemic. (READ: OFW tales: How some repatriated Filipinos are faring back home)

Cash remittances coursed through banks also rose for the 2nd month in a row, posting a 7.8% growth equivalent to $2.783 billion in July 2020 from $2.581 billion in July 2019.

By country source, remittances for January to July from the United States, Japan, Singapore, Qatar, and Taiwan registered continued growth, while declines were noted in Saudi Arabia, the United Arab Emirates, Germany, Kuwait, and the United Kingdom.

Is this an upward trend? Analysts like Mapa are still seeing a return to weakness or at best some moderate growth, given job market challenges and layoffs abroad. – Rappler.com

Ralf Rivas

A sociologist by heart, a journalist by profession. Ralf is Rappler's business reporter, covering macroeconomy, government finance, companies, and agriculture.

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