CASH REMITTANCES are expected to rebound with growth of 4% this year after an 0.8% contraction in 2020 as overseas workers’ host countries make progress on their vaccine rollouts and economic reopenings, a senior Security Bank Corp. executive said.
Cash remittances are expected to come in at $31 billion in 2021, representing a strong rebound after the 2020 contraction proved to be much milder than expected, according to Noel S. Reyes, Security Bank’s chief investment officer.
“Full year remittance growth only decreased by 0.8% year on year (in 2020). The performance was even better than the central bank’s revised forecast of minus 2% and an earlier forecast of minus 5% during the peak of the pandemic. This was also better than the World Bank’s projection of minus 13% during the second quarter of 2020. With vaccination programs underway, this will continue to improve,” Mr. Reyes said in a statement.
Cash remittances coursed through banks fell to $29.903 billion last year from $30.133 in 2019 as overseas Filipino workers (OFWs) were thrown out of work due to the pandemic, according to the central bank.
The contraction continued in January, when cash inflows fell 1.7% year on year to $2.603 billion.
Cash sent home by OFWs is a major driver of household consumption in a consumer-centric economy.
Since 2020, 489,451 OFWs have been repatriated as of March 22, of which 20% returned home this year, according to the Overseas Workers Welfare Administration.
Effective vaccination programs will boost consumer confidence and help economies bounce back faster, Security Bank President and CEO Sanjiv Vohra said.
“Once more countries are able to roll out mass inoculations and prevent new infections, we will see consumer confidence go up gradually and we will see sequencing of recovery. However, recovery will not be the same for everyone. We will see some industries recover faster than others,” Mr. Vohra said.
The bank also expects the recently-signed Financial Institutions Strategic Transfer (FIST) law and upcoming reforms that will lower the corporate income tax will provide impetus to the economic rebound.
The Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill is now awaiting President Rodrigo R. Duterte’s signature. If he does not sign, the bill will lapse into law on March 27. — Beatrice M. Laforga