Remittances from overseas Filipinos workers (OFWs) have contributed to meeting the foreign exchange requirements of the Philippine even as external demand was weighed down by the COVID-19 pandemic, according to Bangko Sentral ng Pilipinas Governor Benjamin E. Diokno.
“OFW remittances are a key contributor to the Philippine economy and a stable source of foreign exchange for the country,” Diokno said.
Remittances to the Philippines remain significant, both in absolute terms and as a ratio of the size of the economy.
“The steady supply of foreign exchange ensures a healthy balance of payments position and an adequate level of gross international reserves amid challenges to the external sector,” Diokno said.
Over the past decade, remittances were equivalent to roughly eight to nine percent of nominal gross domestic product. They were also equivalent to about 32 to 37 percent of income from exports of goods and services, and 26 to 37 percent of GIR.
For 2022, the BSP forecasts full year growth in remittances of four percent consistent with its long-term growth trend.
The key factors underpinning the strength of remittances include the increased global demand for OFWs, particularly medical practitioners and health care workers as well as skilled labor in construction and housekeeping, as these jobs help host countries in the pandemic recovery process as well as the tendency of OFWs o maintain a proportion of their remittances for their families’ upkeep, particularly for basic spending needs.
The central bank also noted the increased use of digital financial services in remittance transfers, reinforcing the upward trend of digital adoption in both domestic and cross-border transactions.
Likewise, the Department of Labor and Employment has entered into bilateral labor agreements with host countries to continue allowing the entry of OFWs.
The inflow of remittances also increased with the accelerated vaccination rollout domestically and in OFW host economies, easing travel restrictions, and the reopening of countries to foreign workers.
Moreover, remittances have helped spur consumption during the pandemic.
“Remittances create demand and push domestic production, providing a substantial boost to economic growth,” Diokno said.