Wow, Philippine Remittance January Growth Rates Collapse to Near Zero or Post 2009 Crisis Levels!

Here is the Bangko Sentral ng Pilipinas BSP’s sanitized remittance report for January 2015

 

See BSP’s table here, a longer version of the table can be acquired from the BSP's statistics page

First personal remittances…(bold mine)

Personal remittances from overseas Filipinos (OFs) in January 2015 amounted to US$2.0 billion, higher by 0.2 percent than the year-ago level, Bangko Sentral ng Pilipinas Governor Amando M. Tetangco, Jr. announced today.  Personal remittances from land-based workers with work contracts of one year or more registered inflows of US$1.5 billion. Meanwhile those from sea-based and land-based workers with work contracts of less than one year totaled US$0.5 billion.

A picture speaks a thousand words.

Here is what the BSP didn’t say or refused to say…

Next cash remittances…

Cash remittances from OFs coursed through banks reached US$1.8 billion in January, representing a 0.5 percent year-on-year growth. Cash remittances from land-based and sea-based workers posted inflows of US$1.4 billion and US$0.5 billion, respectively.  The bulk of cash remittances came from the United States, Saudi Arabia, the United Arab Emirates, the United Kingdom, Japan, Singapore, Hong Kong, and Canada.

Again here is what the BSP didn’t say or avoided from saying…

January's remittance growth rates has crashed to almost January 2009 levels (.1% growth for both personal and cash remittances)! To recall, 2009 was the aftermath of the 2008 Great Financial Crisis!  

 

Yet this doesn’t seem to be an anomaly, remittance growth trend has been showing some strains even prior to the November 2014 meltdown where monthly personal remittances growth rates sunk to 1.8% while cash remittances growth rates tanked to 1.5% (adjusted) from the 5.5% to 8% range, as I pointed out here. 

The January trend seems to have only reinforced the current dynamic. Yet if the current momentum persists, then remittance growth rates might turn negative or contract over the coming months. Wow!

I have warned that collapsing oil prices would likely impact remittances last December.

And yet how will the blowing up of the Middle East bubble extrapolate to Philippine OFW remittances? More than half or about 56% of OFWs according to the Philippine Overseas Employment Administration (POEA) have been deployed to this region. Will OFWs (and their employers) be immune from an economic or financial crisis? This isn’t 2008 where the epicenter of the crisis was in the US, hence remittances had been spared from retrenchment. For this crisis, there will be multiple hotbeds. The ongoing crashes in oil-commodity spectrum have already been showing the way.

Again it’s a writing on the wall for the public hype called “consumer driven” economic boom.

This partly explains the ongoing pressures in retail activities and the weakening of the consumer household activities (HFCE) as revealed by the 4Q 2014 GDP data provided by the government, as explained here.

The rising account of store vacancies at shopping malls appear as real world (not statistical) symptoms of this.

Yet ironically, the supply side (housing, shopping malls, hotel and related industries) continues to project consumer trends as perpetually headed to the sky for them to borrow and build with ferocity. For instance, the daughter of the Philippines' richest tycoon anchors her firm's expansion projects largely on remittances as posted here

The end result from the widely divergent expectations and activities will be a huge or massive excess capacity mostly financed by debt! 

And yet the sellside industry, expects earnings growth rate for the Phisix in 2015 to be at the mid teens. If current trends continue, then they will not only miss by a mile or by an ocean but by a galaxy!

And whatever strength by the peso, or its outperformance in the region, will be further exposed if such trends continue.

Is it a wonder why the BSP chief adamantly insists of deflationary risks in his latest speeches?