Remittances resilience signals external support amid new US tax
From AB Capital's The Opening Bell: Three Moves
Event
Experts expect Philippine remittances to maintain momentum in 2026 despite the US’s new 1% excise tax on cash transfers from US-based senders, which took effect Jan. 1. The tax excludes bank or card wire transfers, limiting its drag on inflows.
View
Remittances historically act as a driver for consumption and external demand. Even with the tax, channels that remain exempt should preserve most flows. Sensitivity analysis suggests the tax may shave 0.5pp or less from remittance growth, leaving overall contributions steady.
Catalyst
If remittance growth slows less than forecast, private consumption and services spending could outperform base GDP expectations. On the flipside, wider adoption of tax-exempt channels is critical i.e. increased use of formal bank transfers could offset most tax impact, while informal channels might evade efficient reporting.
Action
Steady remittance inflows support consumer sectors, though, monitor how digital remittance uptake evolves. A sharper than expected remittance slowdown, however, would temper consumption forecasts and warrant conservative positioning in domestic demand-linked equities.
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.
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