Remittances from overseas Filipino workers (OFWs) are projected to rise as many developed economies continue to recover, according to GlobalSource Partners, a prominent think tank.
In their report, GlobalSource analysts Diwa Guinigundo and Wilhelmina Manalac highlighted that the recovery in advanced economies bodes well for the flow of remittances from OFWs. Referring to the International Monetary Fund’s April 2024 World Economic Outlook, they noted that advanced economies are expected to see a slight increase in growth to 1.7% this year, up from 1.6% in 2023. The growth rate is anticipated to reach 1.8% in 2025.
“Many OFWs are based in these recovering economies,” Guinigundo and Manalac explained in a PhilStar report, adding that this could positively impact remittance inflows to the Philippines.
However, they cautioned that a downturn in these economies could adversely affect overseas employment opportunities and remittance levels, which are crucial for the country’s real sector and external payments position. OFW remittances are a significant source of foreign exchange for the Philippines and contribute notably to its gross domestic product.
The analysts also pointed out that the geographical distribution of OFWs offers a natural buffer against regional economic downturns. Weak remittance flows from affected regions are often offset by stronger inflows from less impacted areas.
According to data from the Bangko Sentral ng Pilipinas, personal remittances from OFWs grew by 2.9% to $18.10 billion in the first half of this year, up from $17.59 billion during the same period last year. In June alone, remittances increased by 2.5% to $3.21 billion compared to $3.13 billion in June 2023.
Guinigundo and Manalac emphasized that remittances have been vital in supporting the daily needs, housing, education, and even celebratory expenses of many Filipino families, contributing to the steady growth in remittance flows over the years.