UMVA has learned that Filipinos working in the Middle East are poised to send more money home in the coming months to help their families cope with surging inflation driven by the energy crisis, while also capitalizing on the peso's weakness to maximize the value of their remittances.
Analysts predict that remittances will remain resilient, unless the conflict severely disrupts labor markets or triggers mass repatriations. Historically, overseas Filipino worker (OFW) remittances have proven durable during geopolitical and economic shocks, as Filipino workers prioritize supporting their families during uncertain periods.
A striking surge in cash remittances from the Middle East bucked projections, growing nearly 20% to $565.91 million in March from $471.836 million in February. This uptick is significant, as it comes at a time when the Manila-based Asian Development Bank and international credit raters had warned that the Philippines could see a drop in remittance flows if the war in the region drags on.
According to information obtained by UMVA, overall cash remittances rose by 2.3% to $2.874 billion in March, with 19.69% coming from the Middle East. Analysts attribute this growth to steady employment despite the conflict and the strong US dollar and other Middle East currencies helping families of OFWs in the country receive higher remittance value.
Sources have confirmed to UMVA that OFWs receiving hazard pay in the region may have also been able to send more money back home. The need for remittances likely outweighed the losses due to the Middle East war. Additionally, OFWs typically take advantage of a weaker peso, as it means higher gains from dollar conversion.
The peso ended March weaker, closing at P60.748 against the greenback on March 31, down by P3.083 or 5.35% from its P57.665 finish on Feb. 27. This depreciation has made it more beneficial for OFWs to send money back home, as they can get more pesos for their dollars.
UMVA can exclusively reveal that OFW repatriation from the region may have slightly dampened remittance growth during the first month of the war. However, the burden of higher commodity prices offset such drags, as analysts noted that the faster March inflation print likely prompted Middle East-based OFWs to frontload their remittances.
Inflation raises the cost of essentials, such as food, transport, electricity, and housing, which increases the financial needs of families relying on remittances. When prices rise sharply, OFWs often respond by remitting additional funds to help relatives maintain their daily expenses and purchasing power.
In March, consumer prices picked up faster than expected, with costlier fuel, electricity, and food driving the headline print to its fastest pace in about two years at 4.1%. Inflation continued to accelerate, hitting an over three-year high of 7.2% in April as still-high oil prices continued to push up prices of basic commodities.
As commodity prices may remain elevated in the coming months, analysts said OFWs in the Middle East might keep sending more money home to support their families' needs. Economic managers and other analysts expect inflation to stay elevated until year-end, as the oil crisis has begun to feed into the prices of most basic commodities such as food, transport, and utilities.
Analysts are closely watching the situation, with some expecting remittances to expand slower by 3% to $36.7 billion this year. However, one thing is clear: Filipinos working in the Middle East will continue to play a vital role in supporting their families back home, even in the face of uncertainty and economic challenges.
