Remittances slipped by 0.8% in 2020, the first annual contraction in two decades, as some OFWs lost their jobs while others tightened their belts amid the pandemic. Cash remittances coursed through banks stood at $29.9 Billion last year, slightly lower than the record $30.1 Billion in 2019, according to data released by BSP on Monday.
December cash remittances also dipped by 0.4% Year-on-Year (YoY) to $2.9 Billion, but surged by 20.8% Month-on-Month (MoM) driven by seasonal holiday inflows. However, given the strong Peso coming from the spike in dollar reserves, cash remittances in December actually declined by 5.2% YoY on a Peso equivalent basis.
While 351,000 OFWs have since been repatriated from the COVID-19 outbreak last February, we expect cash remittances to sequentially improve this year as inoculations will ramp up the redeployment of workers overseas.
Improvement of remittances should drive the recovery and rotation back to discretionary companies like FB (Target Price: P77.30) and DNL (Target Price: P7.80).