By Katherine K. chan, reporter
declining share of Remittances of overseas Filipino workers (OFW) to the country's gross Domestic product (GDP) indicates what the Philippine economy is Analysts said growth is increasing but reliance on remittances is decreasing.
Security Bank Chief Economist Angelo B. Taningco said the low remittances-to-GDP ratio is “not worrisome” as it indicates continued expansion of the economy.
“The declining remittance share in GDP shows that Philippine GDP growth is outpacing OFW remittance growth,” Mr. Taningco pointed out. businessworld In an e-mail.
“In my view this is not worrying, as it shows that the domestic economy is now being able to absorb more of the country's labor supply given its continued expansion, thereby creating more local employment opportunities,” he said.
Data from the Bangko Sentral ng Pilipinas (BSP) showed that cash remittances reached an all-time high of $35.634 billion in 2025, breaking the previous record of $34.493 billion in 2024.
However, it accounted for only 7.3% of the country's GDP, the lowest share in 25 years or so. 7.2% in 2000.
Union Bank of the Philippines (UnionBank) Chief Economist Ruben Carlo O. Asuncion said the declining trend in the remittances-to-GDP ratio over the past two decades points toward “greater diversification.”Strong and mature growth base.
“(H)istorically, the remittances-to-GDP share has declined from a high in the mid-2000s to (about) 8.7% in 2024, even as inflows have repeatedly set new records, reflecting a more diversified and mature growth base,” he pointed out. businessworld Via Viber.
John Paolo R., a senior research fellow at the Philippine Institute for Development Studies. Rivera attributed the trend to the country's diverse growth drivers such as domestic services, investment and trade.
Asked whether the decline in the remittances-to-GDP ratio should raise concerns, Mr Rivera said: “(It) is not necessarily a negative sign as it largely reflects that the domestic economy is expanding and diversifying faster than remittance flows rather than a weakening of overseas Filipino support.”
“What this signals is a gradual structural shift where growth is becoming less remittance-dependent and more driven by domestic services, investment and trade,” he said in a Viber message.
The Philippine economy is set to grow by 4.4% in 2025, the weakest growth recorded since the pandemic hit in 2020.
risk arises
UnionBank's Mr. Asuncion said the economy is now largely dependent on domestic demand, “with structural dependence on foreign earnings decreasing.”
In 2025, domestic consumption, which declined from 4.9% year-on-year to 4.6%, will account for more than 70% of the country's total output.
However, such a shift exposes the Philippine economy to local and global risks, Mr. Asuncion said.
“Remittances have become a less powerful stabilizer of consumption and external accounts, even as the Philippines continues to run a massive trade deficit, such as a gap of nearly $3.52 billion in December 2025 despite record year-end inflows,” he said.
He said risks also loom from a potential lag in local growth engines as remittances grow modestly, especially as the United States' new levy on remittances could derail inflows.
The US recently imposed a 1% tax on remittances made via cash payments, money orders and cashier's checks, a regulation that potentially pushes US-based senders away from traditional formal channels.
Still, analysts expect remittances to stabilize the economy this year, even if its share in total GDP is declining.
“If GDP growth accelerates modestly and the economy continues to broaden its base, this trend is likely to continue, although remittances will remain a key fixture, particularly during periods of global or domestic uncertainty,” Mr Rivera said.
For his part, Mr Taningco believes the remittance-to-GDP ratio will end up around the high single-digit mark by mid-2026.
“Overall, the declining ratio signals economic expansion, but it also means that the Philippines must rely increasingly on domestic job creation, investment and productivity to sustain growth as remittances become a smaller relative buffer,” Mr. Asuncion said.
The BSP estimates that cash remittances will grow 3% annually to $36.6 billion by the end of the year.