Philippines: Remittances grow at stronger pace in May on low base effect
Remittances totaled USD 2.4 billion in May, representing a 13.1% expansion in annual terms, edging up from April’s 12.7% rise. That said, May’s result, which marked the best reading since November 2016, was flattered by a supportive base effect. On a cumulative basis up to May, remittances summed USD 30.6 billion, coming in above April’s USD 30.4 billion sum. May’s 12-month rolling total signaled a 4.4% increase from a year earlier (April: 1.7% year-on-year).
Nicholas Mapa, senior economist at ING, highlighted the fragility of the recovery in remittance inflows and commented on the FX outlook:
“With world economies gradually reopening in 2021, we’ve noted a decent pickup in remittance flows, however actual remittance levels have yet to return to pre-Covid 19 levels. […] The steady stream of foreign currency sent home by migrant Filipino workers will help offset some weakness in the peso, however remittances alone are not likely to reverse the currency’s recent swoon. With the trade gap swelling past remittance levels and with financial outflows accelerating due to the general risk-off tone, we do expect PHP to remain pressured in the near term.”