The Potential Impact of the COVID-19 Pandemic on the Welfare of Remittance-Dependent Households in the Philippines

The economic downturn, travel restrictions, and sharp drop in remittances triggered by the outbreak of the coronavirus disease 2019 (COVID-19) has significantly affected remittance-dependent countries.

This paper explores the potential impact of the COVID-19 pandemic on the welfare of remittance-dependent households using a dataset collected in remittance-dependent regions in the Philippines prior to the outbreak. First, an empirical model was used to ascertain the relation between the macroeconomic performance of the destination countries, amount of remittances, and welfare of households. Second, the authors used the difference in the IMF’s 2020 GDP forecasts before and after the COVID-19 crisis to project the potential impacts on households.

The projection made by the authors shows remittance inflow will decrease by 23%–32% and household spending per capita will decline by 2.2%–3.3% in one year as a result of the pandemic.

This paper was published in the 24th Issue of “COVID Economics: Vetted and Real-Time Papers” in June 2020, edited and issued by the Centre for Economic Policy Research.