Filipino remittance inflows to the Philippines could face disruption if the conflict between Israel and Iran intensifies and spreads across the Middle East, analysts warned on Monday.
Such disruption could have implications for household consumption and domestic demand, which could weigh on the country’s overall economic growth, they said.
Personal remittances from overseas Filipino (OFs) accounted for 8.3 percent of the country’s GDP in 2024, recent central bank data showed, underscoring their critical role in fueling private consumption — a key driver of the Philippine economy.
From January to April 2025, total personal remittances reached $12.37 billion, a 3 percent increase from $12.01 billion in the same period last year. The United States remained the top source with $4.49 billion, followed by other Asian countries.
The Middle East contributed $1.97 billion, or about 16 percent of total inflows in the first four months.
For the whole of 2024, remittances from
the region reached $6.13 billion, comprising 17.8 percent of the total $34.49 billion in remittances.
“The region hosts a significant number of Filipino workers, particularly in Saudi Arabia, the UAE and Qatar,” John Paolo Rivera, senior research fellow at the Philippine Institute for Development Studies, said.
“If tensions worsen and affect labor markets or trigger mass repatriation, we could see a dip in remittance inflows, particularly from the Gulf states,” he added.
Rivera said the short-term outlook remains stable but cautioned that escalation could trigger targeted disruptions. However, the diverse geographic spread of overseas Filipinos — including deployments in Asia, North America, and Europe — could offer some insulation.
“Still, the government must prepare contingency measures for OFWs (overseas Filipino workers) and continue to monitor geopolitical developments closely,” he added.
Economic risk mounts
Ateneo de Manila University economist Leonardo Lanzona said the broader economic impact of a prolonged conflict would dampen global growth and push up prices.
“Remittances will decrease. No one is safe,” Lanzona said.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said a wider conflict could disrupt economic activity and travel in the region — especially in major OF host countries — reducing remittance flows.
He added that higher oil prices driven by instability could stoke inflation, weigh on global economic growth, and further slow remittances.
Ricafort also flagged external risks such as shifts in US immigration policy, which could tighten employment opportunities for Filipinos abroad.
Remittance tax proposal
Compounding the risk is a proposal in the United States to impose 3.5 percent tax on outward remittances, as part of the so-called One Big Beautiful Bill, Junjie Huang, economist at Deutsche Bank Research, said.
“The US accounts for 41 percent of total Philippine remittance inflows. If passed, such a tax could lead to a 1.4 percent decline in total inflows,” Huang said.
He cautioned, however, that this might overstate the impact, as only 9.8 percent of OFWs work in the Americas, while the Middle East accounts for nearly half of all Filipino migrant workers.
Despite a 4 percent remittance uptick in April 2025 — attributed to base effects — Huang said the growth trend has softened, with year-on-year increases slowing from 3.3 percent in November 2024 to 2.6 percent in March 2025.
A shifting landscape
In the long term, Huang said structural shifts in OFW deployment and labor market dynamics may reshape remittance trends. Demand for Filipino healthcare workers in aging societies could spur more outbound migration. Conversely, growth in the domestic BPO sector may encourage some OFWs — especially those in foreign-based BPOs — to return home.
Post-pandemic reintegration also appears to be playing a role.
“The share of households with OFWs declined to 6.5 percent after COVID from 10 percent before, as more opted to stay in the Philippines,” Huang said.
“This partly explains why average remittance growth post-COVID has slowed to 3 percent from 5.8 percent in the 2010s.”
He added that remittances also dropped to 7.7 percent of GDP from 8.4 percent before the pandemic, reflecting both behavioral and structural changes in the overseas Filipino economy.
