The personal remittances from OFWs abroad are the major catalyst for domestic consumption of the country and in 2018, it accounted for 9.7% of the country’s GDP. Major sources of remittances are from the US, Saudi Arabia, UAE, Singapore, Japan, UK, Qatar, Canada, Germany, and Hong Kong. Remittance inflows from land-based OFWs with one year or more contract and from sea-based and land-based workers with contracts less than one year pushed the overall growth of personal remittances last year.
In 2018, the overall global remittance grew by 10% to USD 689 billion, including USD 528 billion to developing countries according to the World Bank. India remained on top with the highest remittance received amounting to USD 80 billion. It is closely followed by China with USD 67 billion in inward remittances, and once again, the Philippines landed on the 3rd spot with USD 34 billion along with Mexico. Overall global remittances are expected to grow at 3.7% to USD 715 billion in 2019 including USD 549 billion to the developing nations.
The Philippines received a record-high inward remittance inflow last year but the annual growth rate saw a decline in 2018 as shown on the table above. The countries that contributed most to the increase during the month of December 2018 were the US and Canada, while remittances from Gulf countries declined by 15.3% in 2018 compared to the growth of about 3.4% in 2017 from the same region.
Many factors have been cited as causes responsible for the decline. Diplomatic fallouts involving the Philippines with countries like Kuwait, and Saudi Arabia and an international wave of tensions such as the trade tensions between the US and China resulted in driving the value of pesos to an all-time low against the dollar.
Funds from remittance have a direct and positive relationship with the increase in the quality of education, improvement in the standard of living, healthcare facilities, and an increase in household income of the Filipino families of the OFWs. Remittance has made a significant contribution towards the overall socio-economic development of the Philippines.
Many countries in the world are dependent on the remittances sent by their migrant workers abroad and the Philippines is a quintessential case, where most families rely solely upon the remittances sent by their relatives from other countries. These OFWs become the breadwinners and they work hard to support their families back home. In return, those who are in the Philippines take care of the children, elderly parents, and manage the entire household in the absence of the family member who is working abroad. With this trend, the personal remittance inflows to the Philippines will never cease.
Remittances usually peak towards December each year as more than 10 million Filipinos and contractual workers who are residing abroad send more money to support increased spending for festivities and gifts during the holidays or the Christmas season in the Philippines.
The remittance inflows to the Philippines will keep on growing as more and as more migrant workers move to different parts of the world to seek better opportunities each year. In the last decade, increased competition in the remittance industry coupled with the boom of mobile has attracted more OFWs to send money through formal channels.
Online money transfer companies play a big role in facilitating this change to make the remittance industry transparent and competitive. Sending money to the Philippines has never been safer, faster, and cheaper!
OFWs work with their sweat and blood to earn money, and therefore to find the right channel to send money home should be the priority at all times. So, compare your options before sending money home!