Overseas Filipino Workers (OFW) remittances: a continuing mitigant in the Philippine economy

PHILIPPINES - Report 26 Aug 2024 by Diwa Guinigundo and Wilhelmina Manalac

It should be obvious by now that there is no territory in the world where there is no Filipino worker. Globalization has made the world a smaller place to live and work. This is also true for Filipino workers who go abroad on contract or as migrant workers. Diversified across the globe, OFW remittances have provided a natural hedge against specific regional recessions even as of today, as weak remittance flows from affected areas have been mitigated by remittances from less affected parts of the world. OFW remittances have supported the country’s current account by mitigating its chronic deficit, which in 2023 stood at $11.2 billion and US$1.8 billion in the first quarter of 2024. In many ways, OFW remittances help stabilize volatile capital flows and the peso-dollar exchange rate.

The prospects for OFW remittances appear promising given the recovery of many advanced economies. A reversal of fortune in the advanced economies, however, could be ominous for overseas employment and corresponding remittances, as well as their mitigating impact on both the real sector and the external payments position of the Philippines, and for that matter, other labor-exporting economies. 

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