BSP sees travel receipts slashed by half, 5% slide in remittances due to pandemic

Metro Manila (CNN Philippines, June 11) – The pandemic will slash remittances from overseas Filipinos by about $1.5 billion this year and will cut tourism money flows by more than half, latest estimates of the Bangko Sentral ng Pilipinas showed.

BSP Governor Benjamin Diokno released Thursday the Monetary Board's latest set of assumptions for the Philippine economy, showing huge declines and slowdowns in key industries which have traditionally supported the economy.

A 56.9 percent collapse in tourism receipts is expected for 2020, which will reverse a 19 percent surge a year ago. Travel restrictions have been in place since late January, which was eventually expanded to all foreign destinations in mid-March when the government imposed a lockdown on Metro Manila and select parts of the country to contain the spread of the disease.

Diokno said this could be easily the steepest dive for the travel industry. However, this is likely softer compared to the impact on economies of neighboring states like Thailand and Hong Kong, which are more dependent on foreign travel.

"There’s a high degree of uncertainty in one’s forecast given what we don’t know yet about the depth and duration of the pandemic and the behavior of consumers (travelers, tourists, businessmen) and firms moving forward," the central bank chief told reporters in a group message.

Cash remittances from Filipinos abroad will also drop by five percent this year to $28.6 billion (about ₱1.43 trillion), which would spell a $1.5-billion (about ₱75 billion) decline in money flows that typically support the needs and wants of their families back home. These funds, in turn, support domestic consumption and drive economic growth.

Prior to the COVID-19 crisis, the central bank thought remittances will pick up by three percent this year. "This is due mainly to large repatriation of workers and major economic disruptions in host countries," Diokno said.

The government expects up to 500,000 overseas Filipino workers to fly home after losing their jobs abroad due to the pandemic. However, the BSP said the recovery may be fast, as they expect a four percent rise in remittances to $29.8 billion (about ₱1.5 trillion) by 2021.

These contractions are expected to pull the country's overall balance of payment position to a $600-million surplus, a sharp drop compared to the $7.8-billion surplus for 2019. Still, both suggest that more funds entered the country than the amounts that went out.

Meanwhile, the BSP expects sustained but softer growth for the business process outsourcing sector, with profits seen to rise by just two percent compared to the previous five percent estimate.

Foreign direct investments are also seen to ease, raking in just $4.1 billion compared to $7.6 billion infused by investors a year ago.