Remittances by overseas Filipino workers (OFWs) in January rose at their slowest pace in five years, the latest data from the central bank showed on Monday, with the slowdown traced to the additional public holidays declared for the Philippine visit of Pope Francis during the month.

OFWs’ personal remittances increased 0.2 percent to $2.01 billion in the first month of this year from the $2 billion recorded a year earlier, according to data from the Bangko Sentral ng Pilipinas (BSP).

The pace was the slowest expansion in remittances seen since 2009. For comparison, the rate for January remittance growth in the years from 2010 through 2014 has ranged from a low of 6.4 percent to a high of 9.5 percent, as shown by BSP data.

Impact of extra holidays
“While optically weak, we think the print likely reflects some impact from the three additional public holidays during Pope Francis’ state visit over January 15 to 19, which led to bank closures during the period,” analysts at UK-based investment bank Barclays wrote in a commentary.

The analysts also pointed out that the weakness in remittances is consistent with other data for January, such as exports, which were also negatively impacted by the additional public holidays.

The Barclays analyst added that there was also likely to be some payback in the data from the strength in December last year, meaning that some OFWs likely ‘over-remitted’ in December and sent less in January. The amount sent home by the OFWs in December reached its highest monthly level to date at $2.56 billion.

“As such, we would not read too much into the unusual weakness of this month’s data, as we are likely to see a recovery in February,” Barclay’s concluded.

For full-year 2014 (correct?), personal remittances set an all-time high for the Philippines at $26.93 billion.

Job order processing lags
While not drawing any conclusions in its press statement, the central bank suggested another possible reason for slowing remittances with the disclosure that preliminary reports by the Philippines Overseas Employment Administration (POEA) indicated that only 26.3 percent of 77,009 total approved job orders in January were processed during the period.

Processed job orders were intended mainly for service, production, and professional, technical and related workers in Saudi Arabia, Kuwait, Qatar, Taiwan, and the United Arab Emirates.

BSP sees continued strength
The BSP highlighted “continued demand for skilled Filipino manpower, which contributed to the steady inflow of remittances” in pointing out that despite the sharp slowdown and growth, personal remittances did expand slightly (0.2), driven by more than $1.5 billion transferred by land-based OFWs with longer-term (one year or more) contracts.

Meanwhile, remittances from both sea-based and land-based workers with short-term contracts totaled $500 million.

Personal remittances consist of the net compensation for OFWs, personal transfers such as current transfers in cash or in kind, as well as other household-to-household transfers between Filipinos abroad and capital transfers between households.

Cash remittances up 0.5%
The central bank data also showed that cash remittances coursed through banks rose by 0.5 percent year-on-year to $1.81 billion in January.

Cash transfers from land-based workers reached $1.4 billion, while those from sea-based workers totaled $500 million.

The BSP data showed that the United States, Saudi Arabia, the United Arab Emirates, the United Kingdom, Japan, Singapore, Hong Kong and Canada were the major sources of cash remittances.

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