The Coronavirus outbreak is first a human crisis before an economic one. According to Johns Hopkins University, more than 2.5 million people tested positive for COVID-19, and above 188,846 deaths have been reported globally. The Philippines has one of the highest numbers of COVID-19 cases in Southeast Asia with over 6981 and the number of deaths at 462.
The outbreak has crippled the economy as economic activities dropped, strict social distancing measures are imposed by countries to adhere to the recommendations by the World Health Organization and other public health authorities around the world.
Impact on the Philippine Economy
Due to the economic fallout from the coronavirus pandemic, it has been predicted that as many as 1.2 million Filipinos could be unemployed. The Gross Domestic Product (GDP) growth of the Philippines that has averaged around 6 percent annually for the past decade is expected to contract this year.
Primary economic growth drivers like consumption, tourism, and trade are impacted as the lockdown measures and strict travel restrictions remain in a bid to flatten the curve.
In March, the Philippines became the first country in the world to temporarily shut down its financial markets in response to the coronavirus outbreak. When the markets reopened after two days, the Philippines Stock Exchange index reported its biggest intraday-loss in 33 years. A 24% drop leading to a loss of 40% for the month.
Risk-averse foreign investors were quick to leave the market and sold over $480.5 million worth of local stock, the fastest pullout in Bloomberg's tracking history of the data since 1999.
The government had earlier set a 6.5 % to 7.5% growth target for this year. Due to the adverse impact of the coronavirus outbreak, the growth is estimated to between -0.6% to +4.3% in the absence of mitigating measures.
Coronavirus Impact on Trade
The Coronavirus pandemic has disrupted trade across the globe. Especially for a country like the Philippines which is highly dependent on China.
China is the top trading partner of the Philippines with an estimate of 18.8% of the total trade as per the Philippine Statistics Authority (PSA). China is also the biggest importer for the country as 22.9% of total export went to China in November 2019. And the Philippines imported roughly 20% of goods from China. These numbers have fallen sharply and it is not likely to improve until the Q1 of 2021.
Effect of Coronavirus On Tourism
Tourism is one of the main economic drivers of the Philippine economy. In 2018, its tourism receipts in percent of total exports were high compared to some other neighboring Asian countries.
The travel and tourism sector contributed $82 billion to Philippine's economy or nearly 25 percent share to total GDP in 2018, according to the World Travel and Tourism Council (WTTC) report.
The Philippines' tourism revenue alone was USD 9.31 billion in 2019, the Department of Tourism (DOT). Aside from all-time high earnings, the Philippines also achieved its targeted 8.2 million international arrivals.
Border closure, strict travel restrictions, the ban on airlines, together with other containment and mitigation measures in the aftermath of the outbreak, has been a major blow to the industry.
Other businesses affected by the Coronavirus Outbreak
Government measures to save the Philippine Economy
Banking and Coronavirus
As people are observing strict quarantine measures and governments and banks are advising consumers to move to online banking, we have seen a rise in contactless payments.
Remittance into the Philippines and Coronavirus
Remittances received in January 2020 was $2.94 billion, an increase from $2.75 billion achieved in January last year. However, as the economic activity froze further to contain the coronavirus outbreak, an unprecedented amount of job loss around the world has spiked the unemployment rate overall.
More than 10 million Overseas Filipino workers or about 10% of the population send money home. Remittance to the Philippines accounts for 10% of the GDP. The growth in the remittance is down to 2% than the previously projected 3% for 2020.
Recovery of the Economy
JPMorgan has downgraded the 2020 growth forecast for the Philippines to 0.9% from 2.1%. The Philippine economy has shown to be resilient in the past despite extreme volatility. The resurgence of domestic demand, an increase in infrastructure spending, and consumption will drive the recovery, though the markets might take longer to recover. The biggest concern however for the Philippines is when they can reopen the economy and start the economic activity. In the words of Carlos Dominguez, the Finance Secretary, “We all know it's going to have to be a balance between health and profits.”
US Dollar's Current State as a CurrencyThe United States dollar has been the dominant currency in the world for decades, and its importance is reflected in its widespread use in international trade and investment. Despite facing several challenges over the past few years, the dollar remains a popular currency for global transactions.One of the main reasons for the US dollar's popularity is its perceived stability and strength. The US economy is one of the largest and most diversified in the world, with a stable political system and strong institutions. As a result, the US dollar is often considered a safe haven currency, particularly in times of economic uncertainty.However, the US dollar has also faced several challenges in recent years, including a high debt-to-GDP ratio, trade tensions with other countries, and a changing global economic landscape. These factors have led some to question whether the US dollar will continue to hold up against other currencies over the next few years.Forecast for the US Dollar Against Other CurrenciesJPMorgan's PerspectiveJPMorgan, one of the world's leading financial institutions, believes that the US dollar is likely to maintain its strength against other currencies over the next 1-2 years. According to a report by the bank, currency volatility is expected to remain high in the near term, which could lead to fluctuations in exchange rates. However, the report notes that the relative strength of the US economy compared to other major economies is likely to keep the US dollar strong.The report highlights several factors that could contribute to the strength of the US dollar, including the Federal Reserve's commitment to maintaining a stable inflation rate and ongoing fiscal stimulus measures by the US government. JPMorgan also notes that the US dollar's status as the world's reserve currency gives it a significant advantage in global trade and investment.Forbes' PredictionsWhile JPMorgan is optimistic about the US dollar's prospects, Forbes has a more mixed view. The business magazine predicts that the US dollar may weaken against the Indian rupee over the next year, citing factors such as the US-China trade war and a rising Indian economy. However, Forbes notes that the Philippine peso and Mexican peso are likely to remain relatively stable against the US dollar, given the strength of their respective economies.Forbes also points out that the US dollar's status as the world's reserve currency has been in decline in recent years. While the US dollar is still the most widely held currency in the world, its share of global reserves has been decreasing in recent years, partly due to the rise of emerging market economies. This trend could have significant implications for the US dollar's role in global trade and investment in the long term.Investing.com's PerspectiveInvesting.com, a leading financial news and analysis website, takes a different view of the US dollar's prospects. The website argues that the US dollar is unlikely to collapse, despite concerns over the country's debt levels and other economic challenges. The report notes that the US dollar remains the world's most widely held currency and is likely to remain so for the foreseeable future.Investing.com also points out that the US dollar has several advantages over other currencies, including its liquidity and the depth of the US financial markets. The website notes that the US dollar's strength is not solely dependent on the performance of the US economy, but also on factors such as geopolitical developments and the policies of other major central banks.Importance of Staying InformedRegardless of the outcome, it's important for those involved in international trade and investment to stay informed about the latest developments in currency markets and to consider the potential risks and opportunities associated with different currencies.For example, individuals and businesses that frequently transfer money across borders may want to monitor exchange rates and fees to ensure that they are getting the best deal.To see today's best exchange rates and providers for sending money online, use CompareRemit's online comparison tool today!
Wise, a money transfer specialist that went public recently, partnered with Payfare, the digital banker to America's gig workforce. Together, they are on a joint mission to solve the cross-border money transfer problem for gig workers worldwide.One of the significant shifts during the pandemic was the quick adoption of gig workers by businesses. Beyond Lyft, Uber, and other aggregator platforms, companies around the world relied on skilled gig workers to bridge the resource and talent gap.Gig workers can be anyone that performs an income or fee earning activity outside a long-term employer-employee relationship. The gig workers encompasses many form of service providers such as:Freelancers ConsultantsProfessionalsCrowdsourced networkOutsourced teams, etc.A 2019 Mastercard study estimated that the global gig economy generates US $204 billion in gross volume, and is expected to grow by 17 percent by 2023.Why Is This Partnership Between Wise And Payfare Important?For starters, the traditional ways of sending are not fit for the gig economy. Imagine giving US $7 for every US $100 you make. That is how much it costs to send money internationally - an average of 7 percent.The cost may vary depending on the country you are sending from, the country you are sending to, and the money transfer company facilitating your transfer.This newly formed job industry needs a banking or financial transaction system that supports and empowers both service creators and the serving workforce.PayFare is an emerging mobile phone-based digital banking system offering instant payouts to gig workers. The partnership with Wise, a money transfer specialist making international money transfer quick, easy, and convenient, will deliver an experience tailored for the gig economy.Payfare has been on a strategic hunt for partnerships leading up to this announcement. Other key developments of Payfare are:Launched instant pay for DasherDirect users: Giving access to automatic, no-fee payouts after every dash DasherDirect, DoorDash delivery. Drivers/Dashers can access their earnings faster through direct response to Dasher feedback requesting access to their earnings without having to wait for collective payment at the end of a week. Therefore, to avoid work now and get paid later policy.Integrating with Plaid: Payfare integrates with Plaid money transfer financial service company to streamline the onboarding of Payfare users. Allowing them to swiftly and securely connect their account to the applications and services of their choice on their phones.Payfare plans to leverage its Plaid integration to enable new banking features and products to cater specifically to the financial needs of the gig workforce. They are currently under development for their launch in early 2022.Leveraging the RTP network: By connecting to The Real-time Transport Protocol (RTP), Payfare is adding the ability to support payments to bank accounts immediately with enhanced speed and security. Therefore, offering more choice for its corporate clients and users.Why Should I Use Payfare?If you are a gig worker, payout and payment platforms are a hassle. Payfare is the complete digital financial ecosystem for the gig economy.Payfare offers simple mobile banking, instant payout solutions, and loyalty-reward solutions for the gig worker in the digital age. Payfare is already powering brands such as Uber, Lyft, and DoorDash, to provide financial health and benefits for their workforce.The partnership with Wise ensures that you don't need to line up for assistance physically at a bank or search for the nearest money transfer agency.Benefits Of PayfareInstant pay: Payfare provides instant payouts. Each morning the earnings will get deposited to your Payfare account, providing the option to cash out your available earnings anytime, up to 5 times a day. Giving you instant access to your funds immediately without any hassle.Gig workers need not wait for a week or weeks to receive payments. They can now get instantly paid through Payfare's tie-up with most mobile app services like Lyft, Uber, DoorDash, etc.Payfare Mastercard: This digital banking app gives you the Mastercard facility to instantly deposit all your earnings. You can withdraw, transfer and keep your earnings saved in your PayFare account MasterCard.Secure and safe payment system: PayFare plans to offer instant payout and tailored digital banking solutions for all contract workers. A one-stop solution for the gig workforce to provide all necessary banking services and help send remittances to friends and family abroad.International money transfer: Payfare aims to facilitate international money transfers through the infrastructure of Wise by 2022. To become a leader in low-cost international money transfers from job workers' accounts to their loved ones abroad.Payfare, which is working with some of the world's largest on-demand platforms, will be the first online-based banking medium with Wise to enable the growing gig economy to send money internationally.Wise offers low-cost transfer fees and real-time exchange rates for cross-border transfers. Wise's strategic goal aligns with Payfare's mission to enable a quick, easy, and convenient financial platform for the global gig economy.What Are The Best Ways To Send Money Abroad For Gig Workers?The best way to send money abroad largely depends on the transfer fees, exchange rates, and transfer speed. Depending on your need, the best money transfer will differ.For instance, Wise is consistently one of the best money transfer companies that offer a high USD/INR exchange rate, while Xoom, a PayPal service, is one of the fastest ways of sending money.Sounds confusing? When in doubt, compare the top money transfer companies on CompareRemit, and save on every transfer.In conclusion, with the new emerging job roles, we need a banking system that is quick, easy, and hassle-free. Payfare and Wise are gearing up to serve this growing gig economy.According to Payfare, it is a global addressable market of US$455 billion. The ecosystem focuses on solving the pain points and catering to the banking needs by providing a reliable financial system that works for the gig workforce.Simplifying the way we open a bank account, save, deposit, and send remittances back to your home country instantly without any hassle. The partnership is on its way to becoming a one-stop mobile banking and financial solution for all the gig workforce.
The Philippines is an attractive market for top players like Western Union (WU). For a country that receives the fourth highest remittance volume in the world for years in a row, the remittance market in the Philippines is a competitive marketplace for international money transfer service providers.Western Union, founded in 1851, is a global leader in cross-border, cross-currency money movement and payments. It has one of the largest global financial networks spanning over 200 countries and over 130 currencies.The company is among the top players in the industry despite being the oldest player, thanks to its continuous investments to stay valuable and relevant to the ever-changing demands of consumers in today's digital age. The company has built robust digital services through massive infrastructure investments and global digital partnerships.Western Union provides multiple ways to send money through the web, mobile app, and thousands of agent locations (over 550,000) all across the globe, coupled with convenient pay-out options including bank accounts, wallets, cash-pick up, it offers unmatched international money transfer services to businesses, corporations, and consumers.In recent years, the company has witnessed double-digit growth in its digital money transfer revenues (from its website and several digital partnerships), a 38% increase from over $600 million in 2019 to more than $850 million in 2020. By the end of 2021, it expects to exceed $1 billion.As we will discuss in detail later in the blog, Western Union's expansion of digital services in the Philippines is a key development for the growth of digital remittances in the country.How Money Transfers Companies Are Able To Expand Their Services In The Philippines?Remittances from the Overseas Filipino Workers (OFWs) remittance had remained resilient for years. According to the World Bank, OFWs sent a total of $34.9 billion in 2020 despite the global economic downturn due to the pandemic.Given the growing number of mobile and internet users and widespread digital penetration, the digitization of the remittance industry has been rapid in the Philippines. Digital remittances are becoming mainstream in the Philippines, given their lower cost, higher currency exchange rates, faster execution, convenience, and security.It is important to note that about 71% of the country's 72 million adult population remained unbanked, according to the Bangko Sentral Ng Pilipinas (BSP) 2019 Financial Inclusion Survey. That said, the Philippines is home to around 2000 pawnshops.Popular pawnshops in the Philippines such as Cebuana Lhuillier, Palawan Pawnshop have partnered with top international money transfer companies such as Xoom, WorldRemit, to give easy access to money transfer services.Pawn Shops allow you to borrow money using your possessions such as jewelry, gadgets, vehicles, etc. These pawn shops have evolved to facilitate money transfers both domestically and internationally and even offer services like micro-insurance, microloans, bills payment, money exchanges, and more.For OFWs sending money to loved ones in the Philippines, such partnerships bring great benefits. OFWs can send money online from anywhere in the world and the recipients can visit any branch in the Philippines to pick up the remittance.At the same time, money transfer companies can expand their network in the country with such partnerships.Western Union Digital Partnerships In The PhilippinesWestern Union has been strengthening its presence in the Philippines through numerous collaborations.Last year, Western Union partnered with Cebuana Lhuillier Pawnshop, one of the Philippines' biggest non-bank financial service providers, as a result of which over 2,500 Cebuana Lhuillier locations across the Philippines became part of the Western Union's global network. Customers using the Cebuana Lhuillier's network can send or receive money via Western Union's network in over 200 countries.The company also teamed up with PERA HUB to provide seamless digital money transfer services across the Philippines through the UnionBank mobile app. In other words, Western Union's digital money transfer tools come integrated into the UnionBank app.Customers in the Philippines can receive international and domestic Western Union money transfers into their UnionBank accounts through the UnionBank app (available for iOS and Android).Western Union has plans to expand the app-based digital money transfer service from their UnionBank accounts to billions of bank accounts, mobile wallets, and cards in about 125 countries, covering more than half a million locations in over 200 countries and territories.Western Union has also collaborated with TrueMoney and CARD Bank, to enable customers in the Philippines to receive money from their loved ones from across the globe.Western Union Expands Digital Money Transfer Services With Cebuana LhuillierWestern Union further extended its collaboration with Cebuana Lhuillier with the launch of digital money transfers that will allow eligible customers to receive Western Union international money transfers directly through the Cebuana Lhuillier Mobile App-eCebuana app ("eCeb"), which is available for iOS and Android.The eCebuana app that comes with embedded micro-savings will enable customers to send and receive money digitally. Instead of going to the retail locations to collect the remittance, receivers in the Philippines have the option to direct an international money transfer into the eCebuana app.To receive a Western Union transfer, users need to choose Western Union as their preferred receiver and put the Money Transfer Control Number (MTCN-available on the receipt given by Western Union with each transfer) and other required information. The money will be automatically credited to the micro-savings account once the steps are completed.Cebuana Lhuillier micro-savings account holders, with the support of Western Union, have the option to receive money in the comfort and safety of their homes and use the funds toward various in-app services including bill payments, load purchases, and other financial transactions within the app. The service will be rolled out locally and globally by early 2022.Also, Cebuana Lhuillier is partnered with some of the biggest brands in the money transfer industry such as MoneyGram, Xoom, WorldRemit, and Remitly so that Filipinos around the world can send money to the Philippines with ease.TakeawayThe digital initiative by Western Union and Cebuana Lhuillier is a time-opportune one. The global digital remittances are expected to reach $8.61 billion by 2025 at a CAGR of 23.8%. The strategic collaboration of the two industry leaders will bring enhanced user experience while bolstering their digital capabilities.Furthermore, the gaining popularity of cryptocurrencies like bitcoin internationally will have a major impact on the global remittance market. Blockchain, the technology behind Bitcoin, is a decentralized, distributed digital ledger that records transactions publicly.The cost of international money transfers can be reduced significantly through the use of blockchain technology due to the lower infrastructure cost, zero hidden fees, and faster transfer speed without the need for correspondent banks.Western Union has already been directing its funds to new technologies such as blockchain and cryptocurrencies. It announced its partnership with Coins.ph, a blockchain-backed e-wallet and digital currency exchange located in the Philippines.
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