Remittances slightly fall in 2020 due to pandemic

Metro Manila (CNN Philippines, February 15) — Filipinos abroad sent less money in December amid the COVID-19 pandemic, the Bangko Sentral ng Pilipinas said Monday.

Personal remittances from overseas Filipinos reached $3.205 billion during the month, smaller by 0.3% than the figure posted in 2019. December's figure ends three straight months of higher amounts sent back home.

"The slight decrease was attributed to the 0.7% decrease in remittances from land-based workers with work contracts of one year or more to US$2.494 billion from US$2.512 billion recorded in December 2019," the BSP explained. This offset transfers made by seafarers and short-term overseas Filipino workers, which grew by a meager 0.8% annually during the period to $647 million.

The month of December is usually marked by homebound cash transfers, as Filipinos overseas aim to send their loved ones money just in time for the holidays.

All in all, Filipinos abroad sent home a total of $33.194 billion for 2020. This is lower by 0.8% than the full-year figure recorded the year prior. The recent level comprises 9.2% of the country's economic output and 8.5% of its gross national income, the central bank added.

Filipino families turn to remittances as one of their main sources for disposable income, with dollars sent home paying for daily expenses like food, utilities, school fees, and even luxuries of their loved ones. This in turn boosts household spending and supports economic activity, which quarantine rules have dampened.

The United States remains the biggest source of total remittances in 2020, consisting almost 40% of the overall amount. Most transfers from Filipinos abroad likewise hailed from Singapore, Saudi Arabia, Japan, the United Kingdom, the United Arab Emirates, Canada, Hong Kong, and Qatar.

ING Bank senior economist Nicholas Mapa noted that while inflows "bucked the general expectation for a substantial contraction" in 2020, remittances might actually be down substantially if adjusted for exchange rate movements.

"In Peso terms, remittances have actually contracted by 4.8% despite OFs struggling to find a way to send home more dollars to pay for fixed Peso expenditures such as tuition or mortgage payments," he noted.

The peso has generally strengthened against the dollar in the past weeks, even falling below the ₱48 mark this Monday as it closed at ₱47.93.