Philippine Markets Newsletter

MONDAY MACRO: The resiliency and growth of this major fund source provides a bright spot amidst current economic uncertainties

January 31, 2022

This source of funds has been a growth driver for our economy for decades, with its ability to increase consumer spending and, by extension, GDP.

With the uncertainties surrounding the stock market and the economy as a whole, this metric would likely provide a bright spot regarding the economic situation for 2022. 

Philippine Markets Newsletter:
The Monday Macro Report
Powered by Valens Research

The Philippine stock market has had its fair share of volatility over the last year, with the Philippine Stock Exchange index (PSEi) teetering between highs of around 7,380 and lows of 6,200, thanks in large part to the pandemic.

2022 will likely meet the same fate.

The uncertainties faced by the local stock market—at least in the short term—can be attributed to fears over the Omicron variant as well as the upcoming Presidential elections.

The country is currently at high risk for COVID-19 due to the faster infection rate of the new variant, which will likely put pressure on the economy as limits are placed on operational capacity for businesses and activity in general.

As for the elections, investors are still gathering information as to who among the Presidential candidates would likely implement policies and have platforms that are more economy- and investment-friendly.

That said, there is one thing that may offset the market volatility: OFW remittances.

OFW (Overseas Filipino Workers) remittances have historically been a significant contributor to the country’s GDP by way of increased consumer spending. 

Specifically, Filipino families use remitted cash as part of their household budgets, spending it on basic needs such as groceries, utilities, and tuition fees as well as a few discretionary items here and there.

This increases the demand for consumer goods and services, and consequently the output produced by the private sector, which would increase GDP all else constant.

It also helps that macro tailwinds have minimal effects on the growth of remittances received.

In 2020, the Bangko Sentral ng Pilipinas (BSP) predicted a 5% decrease in remittances owing to displaced OFWs as companies worldwide cut their workforce during the pandemic. Fortunately, remittances dropped by only 0.8% year-over-year to $29.9 billion, illustrating its resiliency amidst major economic disruptions.

In 2021, remittances reached a new high, coming in at $31.1 billion, with BSP and the Asian Development Bank (ADB) forecasting that this would continue through 2022 as OFWs are redeployed.

Furthermore, more advanced economies are recovering relatively much quicker from COVID-19, most of which are major sources of remittances for the country. 

Particularly, the U.S. economy experienced strong recovery in the previous year. Although there are still headwinds that plague the country, the consensus from economists is that these issues are unlikely to reverse the country’s growth.

This is great news for the Philippines. The U.S. is the largest source of remittances, making up about 40% of the total value. Remittances from the U.S. grew 9.2% from 2019 to 2020, and 7.3% from January to November of 2020 to the same period in 2021. The data hasn’t been released yet but considering that most remittances are made during the holidays, this number is likely higher.

The U.S. is also gearing up for economic expansion through increased infrastructure spending and employment opportunities under Biden’s Build Back Better Plan. The Philippines may be an indirect beneficiary of this if more Filipinos get on the U.S. job market.

Overall, while there’s still some degree of volatility in the stock market as well as economic uncertainty, there’s no doubt that remittances would provide bright spots for investors looking for a little more stability.

About the Philippine Markets Newsletter
“The Monday Macro Report”

When just about anyone can post just about anything online, it gets increasingly difficult for an individual investor to sift through the plethora of information available. 

Investors need a tool that will help them cut through any biased or misleading information and dive straight into reliable and useful data. 

Every Monday, we publish an interesting chart on the Philippine economy and stock market. We highlight data that investors would normally look at, but through the lens of Uniform Accounting, a powerful tool that gets investors closer to understanding the economic reality of firms. 

Understanding what kind of market we are in, what leading indicators we should be looking at, and what market expectations are, will make investing a less monumental task than finding a needle in a haystack.

Hope you’ve found this week’s macro chart interesting and insightful. 

Stay tuned for next week’s Monday Macro report! 


Angelica Lim 
Research Director
Philippine Markets Newsletter
Powered by Valens Research

View All

You don’t have access to the Valens Research Premium Application.

To get access to our best content including the highly regarded Conviction Long List and Market Phase Cycle macro newsletter, please contact our Client Relations Team at 630-841-0683 or email

Please fill out the fields below so that our client relations team can contact you

Or contact our Client Relationship Team at 630-841-0683