The remittances received by the countries of Latin America and the Caribbean will reach a record of 155 billion dollars in 2023, driven above all by hundreds of thousands of immigrants who send money to the region from the United States to help their families survive, according to projections released on Thursday by the Inter-American Development Bank.
The total volume of remittances in dollars is equivalent to an increase of 9.5% compared to the 142 billion received in 2022 and completes 15 consecutive years of growth. It also reflects the migratory flow within the Western Hemisphere and the contribution that migrants make to their countries of origin.
“It continues to be an important source at an aggregate level for the economy and an important source of subsistence for many families in the region,” said Felipe Muñoz, head of the IDB migration unit, in an interview with The Associated Press.
The increase takes place at times when the Latin American economy is going through a slowdown, with a meager growth estimated at 2% for this year, which is not enough to reduce poverty or create jobs, according to World Bank projections. For the Economic Commission for Latin America and the Caribbean (ECLAC), the forecasts are even less encouraging: growth of just 1.7% expected for this year and 1.5% for 2024.
With difficulties finding work, high inflation rates and high interest rates that restrict credit, the weakening of the economy has generated social tensions. Poverty affects nearly a third of the region’s population.
In this context, remittances are a help for economies. At the regional level, they represent 2.5% of the Gross Domestic Product and their volume in dollars has even exceeded foreign direct investment in the region, not including Brazil.
In Central America they are equivalent to 12.7% of GDP. In Nicaragua, they reach 30% of GDP, in Honduras 27%, in El Salvador 24% and in Guatemala 19.5%.
In South America the impact is 0.7% on GDP, but the IDB warns that although it is lower than in other subregions, remittance flows benefit millions of low-income families that could otherwise fall into poverty. even more severe.
USA It is the country from which the most remittances are sent to the region: 60%. The increase in volume could be explained in part by an increase in the employment rate of migrants in this country, which reached 95.1% in 2023, and improvements in the income of immigrants who send that money, with an average weekly salary of $860, according to the IDB.
Immigrants from Latin America living in the United States are 23.1 million, 2.3% more than in 2022, according to statistics from the Census Bureau. The IDB, however, said that this recent increase in the number of migrants is not necessarily reflected immediately in remittances since it takes time for them to settle and find work before they can send money.
Although remittances in dollars have increased, when the money received by families is analyzed taking into account inflation and the devaluation of local currencies, the average amount has fallen slightly, with marked differences depending on the country.
In some, such as Nicaragua, the impact of remittances was positive, but in others such as Mexico—where the local currency appreciated against the dollar—the effect was smaller despite the greater volume of remittances.
Mexico will receive a record of more than $64 billion in remittances in 2023, an increase of almost 10% when compared to the previous year and equivalent to 42% of the region’s total remittances. It is the second country in the world that receives the most after India. 96% of them come from the United States and represent almost 4% of its GDP. However, due to the appreciation of the Mexican peso, the purchasing power of these remittances fell by 18.9%.
Nicaragua, meanwhile, will receive just over $5 billion in remittances in 2023, an increase of nearly 60% compared to 2022.