Remittances from UK to slow down after Brexit, says HSBC

While the recent Brexit victory will have minimal impact on Philippine financial markets, the Hongkong and Shanghai Banking Corp. Ltd. on Monday said it could indirectly lead to a drop in remittances from the United Kingdom.

“We’ve got our UK GDP (gross domestic product) forecast. We’re not seeing a recession but we’re not far off. That might well impact your remittances flow into the Philippines,” Herald van der Linde, HSBC head of Equity Strategy for Asia Pacific, told reporters in Makati City.

The United Kingdom is one of the country’s sources of remittances, accounting for 5.6 percent of total inflows. This translates to $1.4 billion of the $28.5 billion which came into the country in 2015. 

Another downside risk to inflows would be the decrease in remittances from the Middle East with the drop in oil prices, Van der Linde said.

He noted, however, that there may be a counterbalancing effect from other countries which may register an increase in the money transfers to the Philippines.

“One region [does] not do good, other regions may pick up,” Van der Linde said, noting that the dollar is expected to strengthen, which will in turn increase the value of the funds sent in from the US.

“What comes out will actually go up – a counterbalancing effect,” he said.

The latest data from the central bank shows that personal remittances from overseas Filipinos rose by 3.8 percent year-on-year to $2.4 billion in April, the bulk coming from the US, Saudi Arabia, UAE, Singapore, UK, Japan, Qatar, Hong Kong, Kuwait, and Germany.

The central bank expects remittances to reach $26 billion for 2016. – VDS, GMA News