Cash remittances from overseas Filipino workers (OFWs) are likely to remain subdued through the end of the year, as overseas deployment slows and renewed hostilities in the Middle East introduce fresh volatility, Philippine banks said.

In a report dated Sept. 15, Maybank Investment Banking Group said it continues to see cash remittances growing 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.

Separately, Union Bank of the Philippines (UnionBank) expects full-year remittance growth to ease to 2%, citing weak OFW deployment and global geopolitical concerns 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 would log its slowest remittance growth since the coronavirus disease 2019 (COVID-19) pandemic in 2020, when inflows 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 stakes extend beyond the headline figures: remittances are among the Philippine economy’s largest and most stable sources of foreign exchange and a mainstay of household consumption, which is why even modest swings in inflows draw close scrutiny from economists and the central bank.

The Bangko Sentral ng Pilipinas (B) reported on Tuesday that cash remittances — money sent home by OFWs through banks — rose 1.9% year on year to a seven-month high of $3.24 billion in July, from $3.179 billion. The figure was the highest monthly inflow value since the $3.522 billion recorded in December 2025.

According to Mr. Asuncion, the slight recovery in July from June’s more than four-year-low growth of 1.7% softened the impact of declining OFW deployment.

As of July, the country had deployed a total of 980,673 OFWs, 34.04% lower than the roughly 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. Four of those leading destinations — Saudi Arabia, the UAE, Qatar, and Kuwait — are in the Gulf, tying part of the deployment base to the region at the center of the war risks.

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

They noted, however, that OFW deployment across 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.

Mr. Asuncion also noted that the weaker peso that month boosted the purchasing power of remittances, as the currency’s depreciation translated into a higher local-currency value for dollar-denominated inflows.

“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. The peso plunged to as low as P61.847 against the greenback on July 24 and averaged P61.5963 for the month, 8.54% or P4.844 weaker year on year.

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

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

In the first seven months of the year, cash remittances rose 2.3% to $20.389 billion from $19.932 billion a year earlier. The size of any BSP revision, along with the monthly remittance prints through December, will be the key markers of whether the year-end seasonal support UnionBank expects can outweigh the steep drop in deployments.

Source: BusinessWorld