Philippines hit by slowest pace of foreign workers' remittances in April

Amount just hit USD1.9b.

According to DBS, overseas foreign workers’ (OFW) remittances came in at USD 1.9bn in April, or a 5.2% YoY. This is the slowest pace of growth in the past year. But it is hardly a cause for concern as far as external balance is concerned.

Here's more from DBS:

In Jan-Apr14, total OFW remittances reach about USD7.4 bn, or about 6% higher than the same period last year.

Even if has slowed, at the current pace, OFW remittances are still likely to reach USD24 bn by the year-end.

Our current projection pencils in a modest current account surplus of 3.1% of GDP this year, down from 3.3% last year. The strong external balance has been a key positive for the economy in recent years, and S&P also reiterated this point when it upgraded its rating on the Philippines back in May.

And not only that, strong OFW remittances will continue to prop up domestic growth. Note that while private consumption is resilient, there are some risks on the inflationary front.

Bangko Sentral ng Pilinas (BSP) has not explicitly stated its intent to raise its policy rate this year. The rate hikes remain in the offing though and we expect this week’s policy statement to continue portraying a hawkish central bank.

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