The influx of US dollars from Filipino Overseas Workers (OFW) is bolstering the Philippines’ external position, as personal remittances rose 5.3% year-on-year in the 11 months ending November 30. ‘last year.
The Bangko Sentral ng Pilipinas (BSP) said January-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 growth of 4.8% with an inflow of $2.77 billion against $2.64 billion in the same month of the previous year.
Transfers from land-based OFWs with employment contracts of at least one year reached $2.14 billion, up 6.3% from the previous $2.01 billion.
Meanwhile, other OFWs, based on land and at sea, but with contracts of less than a year, sent $581 million, a 1% increase from $575 million.
Of total remittances, cash that OFWs sent through banks reached $2.5 billion in November, up 5.1% from the $2.379 billion sent a year earlier. .
From January to November, remittances rose 5.2% to $28.43 billion from $27.01 billion.
The United States accounted for 41% of 11-month remittances, followed by Singapore, Saudi Arabia, Japan, United Kingdom, United Arab Emirates, Canada, Taiwan, Qatar and Korea from South.
Jonathan Koh, Standard Chartered’s Asia economist, said they expect remittances to continue to contribute to the current account balance.
Current account deficit
The latest BSP data shows that from January to September last year, the country’s current account was pegged at a deficit of $2.6 billion, compared to a surplus of $7.8 billion for the same period. of 2020.
“However, we expect that [remittances] contribution will be offset by increased imports of capital goods and travel services (as borders reopen), causing the current account deficit to widen,” Koh said.
Nicholas Mapa, senior economist at ING Bank in the Philippines, said in a research note that a steady dose of OFW remittances and business process outsourcing receipts helped support the peso for most of 2021, when the local currency depreciated like most in the region.
“We can expect these two types of structural flows to continue circulating in 2022, helping to stabilize the [peso] again,” Mapa said.
“However, we expect external events to outpace actual sector flows as the Fed [United States Federal Reserve] prepares for its eventual take-off in rates this year,” he added. “Remittances and BPO receipts are likely to be heavily used to stabilize the currency.”
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