Remittances up 2.9% in May, but global headwinds loom

Overseas Filipino Workers (OFW) cash remittances in May rose 2.9 percent year-on-year to $2.658 billion, according to Michael Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC). While the increase signals continued resilience, the figure remains among the lowest in a year and is well below the December 2024 peak of $3.38 billion.

Ricafort said the slower pace, compared to the 3.6 percent growth logged in May last year, still bodes well for the economy. 

“Single-digit growth nevertheless is still a good signal or bright spot for the overall economy as an important growth driver,” he said, noting that consumption makes up about 75 percent of the country’s gross domestic product (GDP).

From January to May 2025, OFW remittances totaled $13.766 billion, growing by 3 percent from the same period in 2024. Full-year 2024 figures showed a similar 3 percent annual increase, reaching a new record of $34.493 billion in cash remittances – or about 7.5 percent of GDP. Total remittances, including non-cash transfers, reached an estimated $40 billion, accounting for 8.7 percent of GDP.

Seasonal boost and exchange rate impact

The peso’s appreciation, which saw the local currency close at P55.745 to the dollar in May 2025 – a 4.7 percent gain from P58.51 a year ago – likely pushed OFWs to send more dollars to maintain the same peso value for domestic expenses. Ricafort said remittance flows were also influenced by seasonal factors such as summer vacations, fiestas, and tuition payments ahead of the June school year opening.

Traditionally, OFW remittances surge during the Christmas holidays, Holy Week, and school enrolment periods. Ricafort added that many OFWs return home between June and August, coinciding with school breaks in the Northern Hemisphere, which further drives the peso conversion of foreign earnings.

Despite slower month-on-month growth, remittances continue to serve as a vital lifeline for Filipino households and a stable pillar of domestic consumption. OFW families are major consumers of homes, vehicles, private education, and investments – sectors that help drive broader economic activity.

Global risks cast shadow

Still, Ricafort warned of emerging global risks that could dampen remittance growth in the coming months. Among them is the 3.5 percent tax recently imposed by the Trump administration on non-resident remittances in the U.S., which could increase transfer costs for OFWs and discourage high-volume remittances.

In addition, renewed geopolitical tensions such as the Israel-Iran conflict since mid-June and protectionist U.S. immigration and trade policies may pose challenges. Ricafort said stricter visa regulations and “America First” job measures could impact employment prospects for Filipinos in the U.S., which remains the largest source of OFW remittances, albeit with modest year-on-year growth of about 1 percent.

He also noted that broader global economic uncertainties – triggered by tariffs and trade disruptions – could reduce job security and remittance capacity in other key host countries.

Despite headwinds, the long-term trajectory of OFW remittances remains intact, supported by the country’s demographic strength and labor exports. The Philippines continues to rank as the fourth-largest remittance recipient globally, trailing only India, Mexico, and China. It also remains a leading source of seafarers and healthcare workers, particularly nurses.

Ricafort emphasized that remittance growth – though steady at around 3 percent annually – has outpaced population growth of 0.9 percent, even if it lagged behind the 5.4 percent GDP growth recorded in the first quarter of 2025.