Remittances to HCM City fell sharply in the first quarter of 2026 despite strong inflows last year. — VNS Photo Bồ Xuân Hiệp

HCM CITY— Remittances to HCM City declined sharply in the first quarter of 2026 despite strong inflows last year, reflecting mounting external pressures and seasonal factors.

According to the State Bank of Vietnam (SBV) Regional Branch 2, remittances to the city reached about US$2 billion in the January-March period, down nearly 17 per cent year-on-year.

The decline extends a downward trend from the fourth quarter of 2025, when inflows fell 13 per cent quarter-on-quarter to nearly $2.4 billion.

SBV officials said slower global economic recovery and persistently high inflation increased living costs abroad, reducing the disposable income of overseas Vietnamese.

Prolonged monetary tightening in major economies also weighed on business activity and employment, indirectly affecting remittance flows.

Geopolitical tensions, particularly in the Middle East, added to inflationary pressures through volatile energy prices, further eroding real incomes.

While remittances from the region accounted for a relatively small share, the broader impact on global conditions had been significant.

Domestically, narrower interest rate differentials between the Vietnamese đồng and the US dollar reduced incentives to remit, while some investment channels had yet to regain strong appeal.

Seasonal factors also played a role, as remittances typically ease after peaking during year-end demand linked to the Tết (Lunar New Year) holiday.

The SBV expects remittance inflows to remain subdued in the near term, with prospects tied to global economic conditions and overseas labour markets.

Flows may recover gradually in the coming quarters as employment stabilises, but risks from geopolitical tensions and inflation persist.

In neighbouring Đồng Nai Province, remittances through credit institutions also fell by more than 16 per cent quarter-on-quarter to $36.4 million as of the end of March. — VNS