Philippines prints first negative remittance after 2003

In a major surprise, Philippine's remittances fell 0.6% in August, the first negative print since April 2003. This brings YTD growth in remittances to 4.3% y/y, versus 5.8% in 2014. 

While seasonality would imply that remittances should have increased m/m, an excessive currency weakness in key countries such as Singapore, Malaysia and in some Middle East countries weighed on valuations. This factor is also likely to have pushed back the decision to remit sums, says Barclays.

As such, with the PHP being an outperformer against most regional currencies, and with remittances reported in USD, flows continue to be weighed by the sharp declines seen in regional currencies.

"We believe the risk of the next print also being negative has risen, and remittances overall could be negative for Q3. Weakness in host countries' currencies may also push some overseas workers to hold off from sending money home, which may result in higher remittances closer to the festive season. This is unlikely to be a significant concern, as we think a potential decline in remittances would only likely prove temporary. With the recent rebound in regional currencies, we expect remittance flows to improve in Q4", added Barclays.