Angelo Taningco
Economist, Treasury Group

Overseas Filipinos (OFs) cash remittance growth gathered momentum in August as its year-on-year (yoy) rate increased to 7.8% for the month from 7.1% yoy in July. The growth performance was better than our projection (6.0% yoy) and that of the market (5.5% yoy). This is the fourth-consecutive month of growth acceleration. In terms of amount, OFs cash remittances valued $2.5 billion in August, within market estimates including ours.

Figure: OFs Cash Remittance Growth
Jan. 2015 – Aug. 2017
(%)

 
The biggest country contributor to the overall OFs cash remittance growth in August was United Arab Emirates (UAE), which we computed to have accounted for 63% of the growth rate for the month. This was followed by the United States (US) with 11% growth contribution and Singapore and Qatar at 8% apiece.

Cumulative OFs cash remittances climbed to $18.6 billion in January-August from $16.1 billion in January-July. Moreover, cumulative yoy growth rose to 5.4% yoy in January-August from 5.0% yoy in January-July. We believe among the main drivers of the robust cumulative OFs cash remittance growth were the sustained external demand for OF workers amid positive economic recovery in most major host countries; depreciation of the Philippine peso; and higher consumer price inflation in the country. We opined that these determinants of OFs cash remittances would persist throughout the remaining months of the year, thus, we stick to our full-year 2017 OFs cash remittance forecasts of 6.5% yoy and $28.6 billion.

Meanwhile, OFs personal remittances totaled $2.8 billion in August-exhibiting 9.4% yoy growth for the month-an improvement from its 8.7% yoy increase in July. Its increase would likely temper the pressure for the current account to succumb to a deficit position during the month and the third quarter. Moreover, this could help boost household consumption and saving and ultimately gross domestic product (GDP) for the third quarter.

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