Slowdown in remittances expected to continue

REMITTANCES from overseas Filipino workers (OFWs) in the Middle East might take time to recover even with a US-Iran peace deal, considering the significant impact of the war on the region, an expert said.

Jeremaiah M. Opiniano, executive director of the Institute for Migration and Development Issues, said the Philippines should brace for a potentially prolonged slowdown in remittance growth as the economic fallout from the Middle East conflict continues.

“We should brace for it, simply because we have yet to feel the real economic impacts of the Middle East conflict in individual Arab host countries,” Mr. Opiniano told BusinessWorld in an e-mail. 

This came after OFW remittances climbed by 2% year on year to an 11-month low of $2.718 billion in April, marking the weakest annual growth in nearly four years or since the 1.8% in May 2022. 

According to Mr. Opiniano, the recent remittance slowdown was partly due to drags from the Middle East conflict, although global remittance flows are also historically slow between March and April.

“For now, we can see repatriations from some workers there since they were terminated when some businesses got hit by the missile attacks,” Mr. Opiniano said.   

“But the surprise is this: Amid the visible threats of the conflict on people’s safety, their employment and livelihood, their stay in the said Arab host countries, and soon the prospective economic slowdown in these countries, Filipinos in the Middle East still sent higher amounts on aggregate,” he added.

Government data showed over 2.4 million Filipinos are based in the Middle East. As of end-May, over 10,000 OFWs have been repatriated since the US and Israel first launched attacks on Iran on Feb. 28.

Still, Filipinos in the Middle East sent home $491.569 million in April, about 2.8% more than the $478.218 million recorded a year ago. It was 13.1% lower than the $565.91-million cash remittances received from the region in March.

In a separate report, Maybank Investment Bank noted that remittance flows from major Middle Eastern countries remained strong during the period, “suggesting continued resilience” despite ongoing geopolitical uncertainties in the region. 

OFW remittances from Saudi Arabia grew by 2.9% annually to $179.2 million in April but fell by 8% from the March level. Money sent home by Filipino migrants from the United Arab Emirates rose by 2.8% year on year to $117.07 million but down 28.7% month on month. 

Remittance inflows from Qatar jumped by 5% to $83.166 million and inched up 0.7% month on month.

Remittances from the region account for around 20% of the total inflows to the country. 

Still, remittance flows might not stabilize immediately even after US and Iranian officials are set to sign a peace agreement on Friday in Switzerland, said Mr. Opiniano.

“Sure, the US and Iran reportedly agreed on a pact for a peaceful end to the conflict. But the situation will not normalize immediately for these Middle East countries,” he said. “Remember their oil facilities were damaged. Normalizing the oil delivery quota to pre-conflict levels will also take time, even if the Strait of Hormuz reopens soon.”

Maybank Chief Economist Suhaimi Ilias and Economist Azril Rosli said the country will likely see slower remittance growth this year amid lingering geopolitical uncertainties. 

However, continued global demand for Filipino workers may offer some relief in the coming months. 

“Looking ahead, OFW remittances are expected to remain broadly resilient over (the second half), supported by stable overseas employment conditions and the continued demand for Filipino workers across key markets,” Mr. Ilias and Mr. Rosli said.

“Nevertheless, growth momentum may remain modest amid softer global economic conditions and heightened geopolitical uncertainties,” they added.

Maybank sees cash remittances from OFWs rising by 2.8% to $36.5 billion this year, slower than the 3.3% growth to $35.6 billion recorded in 2025. The BSP expects cash remittances to grow by 3% to $36.7 billion this year.

However, Maybank noted that downside risks from heightened geopolitical tensions, particularly in the Middle East, “remain elevated and may contribute to month-to-month volatility.” — Katherine K. Chan