Remittances showing clear moderation

From AB Capital's The Opening Bell: Three Moves

Event

Cash remittances rose 1.9% YoY to US$3.04 billion in August, matching July and extending sub-2% growth for a third month. January-August inflows increased 2.2% to US$23.42 billion, reflecting resilient overseas income support but a clear moderation from the stronger pace seen previously (full-year 2025 growth rate was at 3.3%).

View

We think the slowdown matters because remittances remain an important stabilizer for household spending rather than a source of incremental acceleration. The Php's weakness toward P63 improves the local currency value of dollar inflows, but elevated food and energy inflation will absorb part of that purchasing-power benefit.

Catalyst

To reach the BSP's US$36.6 billion full-year forecast, September-December remittances need to grow roughly 3.8% YoY, above the 2.2% pace through August. Holiday transfers could close part of the gap, although softer overseas labor demand and geopolitical uncertainty keep some downside risk to the official projection.

Action

In our view, remittances should continue supporting baseline consumption, but current growth is insufficient to offset weaker employment and high inflation meaningfully. We would therefore favor value-oriented staples and essential retail exposure, while remaining more selective on discretionary names dependent on stronger real household income growth.

Disclaimer: The information, analyses, and views contained herein is based on sources which we, AB Capital Securities, believe are reliable, but is not guaranteed by us and is not to be considered all inclusive. It is not to be construed as an offer or solicitation of an offer to sell or buy the securities herein mentioned. AB Capital Securities and its Directors and Officers and/or members of their families may have a position in the securities herein mentioned and may make purchases and/or sales of the securities from time to time in the open-market and otherwise.