Hongkong & Shanghai Banking Corp. said Wednesday it expects remittances from Filipinos working overseas to grow 5 percent in 2018, following a 4.3-percent expansion last year, as migrant Filipinos are likely to take advantage of the weak peso.
“Overall remittances grew 4.3 percent year-on-year in 2017, slower than the 5-percent growth in the previous year. We anticipate remittances to rebound in 2018, growing back to its recent trend of around 5 percent, as overseas Filipino workers take advantage of the weak peso,” HSBC said in a report.
The local peso has been hovering near 52 a dollar since the last week of January 2018, as the improving US economy buoyed the greenback against other currencies.
HSBC said, however, that the Duterte administration’s plan to put halt the deployment of Filipino workers to Kuwait could hurt the growth trajectory of remittances this year.
“Downside risks persist given the Duterte administration’s proposal to ban OFWs from going to Kuwait due to recent abuse and maltreatment cases,” the British bank said.
Bangko Sentral ng Pilipinas deputy governor Diwa Guinigundo said last week the proposed total deployment ban of OFWs to some countries in the Middle East due to reported abuses and maltreatment would not have significant impact on remittances growth this year as Filipinos were known to be resourceful enough to find other jobs in other countries.
Finance Secretary Carlos Dominguez III echoed this sentiment, saying overseas Filipinos with the help of the government could tap non-traditional destinations such as China and Russia.
Remittances together with business process outsourcing receipts account for around $50 billion in dollar inflows annually and serve as a steady source of strength for the external payments position.
The Bangko Sentral is set to release the January 2018 remittances data on March 15.
Money sent home by overseas Filipinos reached a record $28.06 billion in 2017, up 4.3 percent from $26.90 billion a year ago and exceeded the Bangko Sentral’s conservative 4-percent growth target for the year.
The higher cash remittances in 2017 was supported by the increase in transfers from both land-based and sea-based workers by 4 percent and 5.4 percent, respectively.
Data showed that in December 2017 alone, cash remittances grew 7.1 percent to $2.741 billion from $2.559 billion a year earlier. The countries that contributed the most to the increase in cash remittances during the month were the United States, United Arab Emirates and Singapore.
Remittances from the Middle East increased 3.4 percent in 2017, driven by growth in remittances from the UAE, Qatar and Bahrain. Remittances from Asia grew 7.3 percent, boosted by transfers originating from Singapore, Japan and Taiwan.
Remittances from the Americas increased 5.8 percent, with inflows from the US rising 5.5 percent.
Data showed that despite the decrease in remittances from the United Kingdom due to the depreciation of the pound against the dollar, remittances from Europe still went up 1.5 percent.
The Bangko Sentral said it expected a conservative 4-percent growth for remittances in 2018.