Cash despatched dwelling by Filipinos overseas reached its highest stage up to now this yr in June, though a possible recession in the US is threatening to clip the expansion of remittances.
Money remittances coursed by way of banks amounted to $2.88 billion in June, up by 2.5 p.c year-on-year, information launched by the Bangko Sentral ng Pilipinas (BSP) confirmed.
READ: BSP: Remittances development hit 5-month excessive in Could to $2.58B
Figures confirmed this was the best influx up to now this yr.
Michael Ricafort, chief economist at Rizal Business Banking Corp., stated remittances had been sometimes excessive in June as Filipinos overseas hike their cash transfers to pay for school-related charges forward of the resumption of courses. Such a seasonal surge, he defined, might final till August.
Financial slowdown
However Ricafort stated the potential of a recession in the US, main host nation of Filipino expats, may pose a critical danger to remittances as information confirmed excessive rates of interest stateside may be beginning to weaken the American job market.
“Danger of financial slowdown and even recession in the US, in addition to in different international locations that host massive variety of OFWs (abroad Filipino staff) … would nonetheless be a drag for remittances particularly if there could be job losses,” he stated.
READ: March remittance development slowest in 9 months
The June spike in inflows introduced the six-month remittances to $16.25 billion, 2.9 p.c larger than a yr in the past. In response to the BSP, money remittances from the US, Saudi Arabia and Singapore contributed primarily to the rise within the first half of the yr.
Information confirmed remittances have been rising at round 3 p.c since late 2022, with the BSP projecting the typical development of those inflows to settle at that stage once more in 2024. That development made some analysts imagine that the expansion of such transfers may be plateauing already even regardless of the weak point of the native foreign money previously months.
Buying energy
Cash despatched dwelling by Filipinos abroad is a serious supply of buying energy within the Philippines, the place consumption sometimes accounts for practically 70 p.c of gross home product. That stated, a plateauing remittance development might translate to sub-par assist to shopper spending.
However Ricafort stated remittances stay a “vivid spot” for the economic system, as they preserve many Filipino households afloat amid stubbornly excessive inflation.
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“However, the continued and constant development in remittances may very well be attributed to greater inflation domestically that required the sending of extra remittances again to the nation,” he stated.
