OFW remittances in peril amid Middle East war risks

By Katherine K. Chan, Reporter

REMITTANCE FLOWS from overseas Filipino workers (OFWs) are likely to remain subdued until yearend as overseas deployment slows and renewed hostilities in the Middle East create more volatility, banks said.

In a report dated Sept. 15, Maybank Investment Banking Group said it still sees cash remittances growing by 2.2% to $36.4 billion this year.

“We maintain our projection for 2026 remittances at +2.2% year on year or $36.4 billion, slightly below the BSP’s latest +2.7% year-on-year growth target,” Maybank Chief Economist Suhaimi Ilias, economist Azril Rosli, and senior economic analyst Fatin Nabila Mohd Zaini said.

“Downside risks from heightened geopolitical tensions, particularly in the Middle East, remain elevated and could contribute to greater month-to-month volatility,” they added.

Meanwhile, Union Bank of the Philippines (UnionBank) expects full-year remittance growth to ease to 2% as it sees weak OFW deployment and global geopolitical woes dampening inflows.

“UnionBank maintains its 2% cash-remittance growth forecast for 2026, equivalent to around $36.3 (billion),” UnionBank Chief Economist Ruben Carlo O. Asuncion said in a LinkedIn post.

“Growth may remain moderate amid weaker OFW deployment and geopolitical risks, although seasonal inflows should provide support toward year-end,” he added.

If both banks’ forecasts materialize, the Philippines will see the slowest remittance growth since the coronavirus disease 2019 (COVID-19) pandemic in 2020, when it contracted by 0.8% to $29.903 billion.

Excluding the pandemic, this year would mark the weakest remittance growth in 25 years or since the 0.3% decline in 2001.

The Bangko Sentral ng Pilipinas (BSP) reported on Tuesday that cash remittances, or money sent home by OFWs through banks, rose by 1.9% year on year to a seven-month high of $3.24 billion in July from $3.179 billion.

This marked the highest monthly value of inflows recorded since the $3.522 billion logged in December 2025.

According to Mr. Asuncion, the slight recovery in July from the over four-year low growth of 1.7% in June softened the blow of waning OFW deployment.

As of July, the country deployed a total of 980,673 OFWs, 34.04% lower than the about 1.487 million recorded in the same period in 2025, based on data from the Department of Migrant Workers.

Most OFWs were deployed to Saudi Arabia, followed by the United Arab Emirates (UAE), Singapore, Hong Kong, Qatar, Taiwan, Japan, Kuwait, Australia, and South Korea.

BSP data cited by Maybank showed that remittance flows from Middle East-based Filipinos eased in July, with those from Saudi Arabia slowing to a 1.3% growth from 2.8% in June, the UAE to 1% from 2.5%, and Qatar to 2.1% from 2.8%.

“Despite the moderation across several Gulf economies, remittance growth remained positive, suggesting that flows from the region continued to hold up amid ongoing geopolitical uncertainties,” they said.

However, for the Maybank economists, OFW deployment to a wide array of host countries has somewhat shielded overall remittances from the geopolitical tensions in the Gulf region.

“Collectively, the continued positive growth across major source markets points to the resilience of remittance dynamics,” they said.

“While performance remained uneven across individual markets, the diversification of remittance sources continues to provide an important buffer against external shocks, helping sustain overall OFW (remittance) inflows amid heightened global uncertainty,” they added.

Meanwhile, Mr. Asuncion noted that the weaker peso that month also boosted the purchasing power of remittances, with its depreciation translating to higher value of dollar-denominated remittances in the local currency.

“The weaker peso also lifted the estimated purchasing power of remittances by 4.2%, supporting household spending on food, housing, utilities, and other essentials,” he said.

The local unit continued to underperform in July as soaring oil prices amid persistent uncertainty over the Middle East war reignited safe-haven demand for the dollar.

It plunged to as low as P61.847 against the greenback on July 24, averaging 8.54% or P4.844 weaker year on year at P61.5963 during the month.

BSP Deputy Governor Zeno Ronald R. Abenoja told BusinessWorld in August that the central bank might revise its remittance estimates this month to reflect the recent developments surrounding the nearly seven-month long Middle East war.

The central bank projects cash remittances to grow by 2.7% to $36.6 billion this year, slowing from last year’s 3.3% to $35.6 billion.

In the first seven months of the year, cash remittances rose by 2.3% to $20.389 billion from $19.932 billion a year earlier.