Personal remittances from overseas Filipinos (OFs) registered a new record high of
US$2.8 billion in December 2016, posting a year-on-year growth of 3.6 percent. As a result, full-year personal remittances reached US$29.7 billion, or a 4.9 percent increase from the year-ago level, and exceeded the projected growth of 4.0 percent for the year, Bangko Sentral ng Pilipinas Officer-in-Charge Diwa C. Guinigundo announced today.1 The growth in personal remittances was steered by the 7.6 percent expansion in remittances from land-based workers with work contracts of one year or more, which totaled US$23.2 billion. This made up for the 3.7 percent decline in remittances from sea-based and land-based workers with work contracts of less than one year to reach US$6.1 billion.
Likewise, OFs’ cash remittances coursed through banks are at a historic high of US$2.6 billion in December 2016, representing a 3.6 percent increase year-on-year. The top countries that contributed to the increase in total cash remittances during the month were the United States (US), Qatar, and Japan. Full-year cash remittances posted a growth of 5.0 percent to reach US$26.9 billion. The higher cash remittances in 2016 were driven by the US$21.3 billion transfers from land-based workers, which grew by 7.6 percent year-on-year. Meanwhile, sea-based workers’ remittances declined by 3.8 percent to
US$5.6 billion. This may have been due partly to stiffer competition in the supply of seafarers, particularly from East Asia and Eastern Europe.
Cash remittances in 2016 continued to increase on the back of improving global economic conditions. Remittances from the Middle East increased by 12.7 percent, driven by growth in remittances from Qatar, Kuwait, Oman, and the United Arab Emirates (UAE). OF remittances from Asia rose by 7.4 percent, buoyed by transfers originating from Singapore, Japan, China, and Taiwan. For the Americas, which increased by 3.8 percent, the major contributor was the 6.2 percent growth in remittances from the US. Meanwhile, remittances from Europe fell by 8.4 percent, owing to the decline in cash transfers from the United Kingdom (UK) (partly due to the depreciation of the pound sterling vis-à-vis the US dollar), Italy, and the Netherlands. By country source, more than 80 percent of the total remittances came from the US, Saudi Arabia, UAE, Singapore, UK, Japan, Qatar, Kuwait, Hong Kong, and Germany.2
The solid growth in OF remittances continues to be a major driver of domestic demand. In 2016, personal remittances represented 8.1 percent of the country’s gross national income (GNI) and 9.8 percent of gross domestic product (GDP).
1 The BSP started to release data on personal remittances in June 2012. As defined in the Balance of Payments and International Investment Position Manual, 6th Edition (BPM6), personal remittances represent the sum of net compensation of employees (i.e., gross earnings of overseas Filipino (OF) workers with work contracts of less than one year, including all sea-based workers, less taxes, social contributions, and transportation and travel expenditures in their host countries), personal transfers (i.e., all current transfers in cash or in kind by OF workers with work contracts of one year or more as well as other household-to-household transfers between Filipinos who have migrated abroad and their families in the Philippines), and capital transfers between households (i.e., the provision of resources for capital formation purposes, such as for construction of residential houses, between resident and non-resident households without anything of economic value being supplied in return).
2 There are some limitations on the remittance data by source. A common practice of remittance centers in various cities abroad is to course remittances through correspondent banks, most of which are located in the U.S. Also remittances coursed through money transfer operators (MTOs) cannot be disaggregated by actual country source and are lodged under the country where the main offices of the MTOs are located, which, in many cases, is in the U.S. Therefore, the U.S. would show up to be the main source of OF remittances because banks attribute the origin of funds to the most immediate source.