BSP wary of Russia-Ukraine conflict's impact on remittances

Warren De Guzman, ABS-CBN News

Posted at Mar 25 2022 12:37 PM

MANILA - The Bangko Sentral ng Pilipinas on Friday said it remained watchful of the ongoing tension between Russia and Ukraine and the resurgence of COVID-19 cases in some countries as these could negatively impact remittances. 

“There may be significant implications for remittances if there is an escalation of the conflict to the greater Euro area," BSP Governor Banjamin Diokno said. 

Remittances from the EU, including the United Kingdom, accounted for about 11 percent of the total overseas Filipino (OF) cash remittances in 2021, he said.

"The other risk is the current resurgence of coronavirus, especially in OF host economies such as Hong Kong and South Korea," Diokno said.

But Diokno is also confident that if the Ukraine-Russia conflict is contained, remittances should do well. 

He added that remittances have remained resilient throughout various crises, including the COVID-19 pandemic, as overseas Filipinos are quite altruistic and tend to send more money home when times are hard.

Overseas Filipino remittances boost domestic demand and provide much needed foreign currency to buffer the Philippines from external shocks.

Over the last decade, remittances have been consistent, with totals equaling roughly 8 to 9 percent of GDP, and 26 to 37 percent of Gross International Reserves.

The BSP expects OF remittances to grow 4 percent this year, slower than the 5.1 percent growth in 2021.

With an already huge base, a 4 to 5 percent growth in remittances this year would be "substantial," Diokno said.

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