Remittances from Filipinos abroad are expected to remain resilient even after posting their slowest growth in nearly two years in February, before the Middle East conflict heightened fears of labor displacement.
Latest data from the Bangko Sentral ng Pilipinas (BSP) showed money sent home through banks rose 2.6 percent from a year earlier to $2.79 billion. That was the weakest pace of growth since June 2024, when remittances increased by 2.5 percent and the lowest monthly inflow since May 2025, when they totaled $2.66 billion.
In the first two months of the year, remittances reached $5.81 billion, up 3.1 percent.
Domini Velasquez, chief economist at Chinabank, said the slower remittance growth in February was partly due to weaker inflows from the United States, where 40 percent of the total cash transfers came from. To note, a common practice of remittance centers in various cities abroad is to course remittances through correspondent banks, most of which are located in the United States.
“The 1 percent excise tax on remittance transfers from the US introduced at the start of 2026 under the One Big Beautiful Act may have weighed on remittances and may have pushed some overseas Filipinos to use alternative transfer channels,” Velasquez said.
The slowdown came ahead of a widening war involving Iran, the United States and Israel that has rattled energy markets and raised fears of job displacement for migrant workers. Inflows from the Middle East accounted for about 18 percent of total remittances to the Philippines last year.
For now, the BSP is sticking to its year-end forecast of 3-percent remittance growth to $36.7 billion, noting that “there remain no signs of mass repatriation or widespread deployment bans” despite the geopolitical turmoil.
The risk extends beyond households to banks, as potential job losses in the Gulf could weaken the financial buffers of workers’ families and their ability to repay loans. In a report on Wednesday, S&P Global Ratings warned that Philippine banks could face pressure on loan quality.
“If labor markets in the Gulf are disrupted, it could affect remittances, which could in turn erode deposit growth and repayment capacity in the Philippines, India and Bangladesh,” S&P said, adding that a widening Middle East conflict poses a $180 billion downside risk to Asia-Pacific banks.
Looking ahead, Robert Dan Roces, group economist at SM Investments, said remittances were likely to show their countercyclical nature during difficult periods. Unlike private capital, which typically retreats during economic downturns or natural disasters, remittances often swell as expatriates step in to provide relief to their families back home.
“The Middle East conflict adds risk, but flows tend to hold as they are need-driven,” he said. “Remittances should remain as a steady support for consumption, just with less momentum.”
Velasquez shared the same view. “In the near term, rising domestic consumer prices—driven largely by increased fuel costs—could prompt OFWs to send more money home to help cover rising household expenses,” she said. “This could offset the losses from repatriation of some OFWs from the Middle East.”
