Remittances plunged to 4-year low in April due to COVID-19 pandemic

Remittances or the money sent home by Filipinos abroad tumbled to its lowest in four years in April due to the impact of COVID-19 pandemic, the Bangko Sentral ng Pilipinas (BSP) said.

Data released by the BSP showed personal remittances —the sum of transfers sent in cash or in-kind via informal channels — amounted to $2.276 billion in April, down 16.1% from $2.713 billion year-on-year.

This is the lowest monthly figure since January 2016 when personal remittances came in at $2.208 billion.

This brought the cumulative remittances for the first four months of the year to $10.494 billion, a slight decrease of 2.9% from the $10.811 billion recorded in the same period last year.

Meanwhile, cash remittances — money transfers coursed through banks —totaled $2.046 billion, down 16.2% from $2.441 billion last year.

For the period January to April, cash remittances amounted to $9.448 billion, 3% lower than the $9.739 billion year-on-year.

“The decline in cash remittances was attributed to the unexpected repatriation of some OFs (overseas Filipinos) deployed in countries heavily affected by the pandemic, and temporary closure/limited operating hours of some banks and institutions from both the sending and receiving ends that provide money transfer services during the lockdown,” the BSP said.

Sought for comment, Rizal Commercial Banking Corp. chief economist Michael Ricafort said the steep decline in OFW remittances in April 2020 to the lowest amount in more than four years is “somewhat expected” amid the height of the lockdowns or stay-at-home orders in many host countries around the world such as in the US, Middle East, and in some countries in Asia and in Europe, thereby leaving many OFWs without income or with sharply reduced income.

“OFW remittances could remain relatively low/sluggish in May 2020 as many host countries remained in lockdown and also in view of the continued repatriation of tens of thousands of OFWs back to the Philippines,” Ricafort said.

“The height of the lockdowns may have also hampered/disrupted the sending and receiving of OFW remittances through various non-digital/non-electronic channels, thereby also contributing to the reduction in OFW remittances volume/amounts,” he added.

By country source, the United States registered the highest share to total remittances at 39.6% for January to April 2020.

It was followed by Singapore, Saudi Arabia, Japan, United Arab Emirates, the United Kingdom, Canada, Qatar, Hong Kong, and Korea.

The combined remittances from these countries accounted for 79.1% of total cash remittances, according to the BSP.

“OFW remittances could start to pick up especially by June 2020 as many host countries re-open from lockdowns that would enable some OFWs to work again, earn income, and be able to send remittances to the Philippines again,” Ricafort said.

“However, repatriated OFWs and other OFWs that lost jobs/livelihood even after the easing/relaxation of the lockdowns in many host countries around the world, such as those in the tourism-related industries including those in the cruise ship industries could remain a drag on OFW remittances in the coming months, until such a time when some of them restore the jobs lost in the same industry/host country or in another industry/host country in the coming months,” he said.

The economist noted that the decline in remittances could further weigh on the local economy that already contracted largely due to the lockdown since mid-March, as remittances account for about 10% of the local economy and a significant contributor to consumer spending, which accounts for at least 70% of the local economy.—AOL, GMA News