Remittances to Mexico hit a record high of over US $63 billion in 2023, according to data published by the Bank of Mexico on Thursday.

Mexicans living and working abroad sent $63.31 billion home last year, a 7.6% increase compared to 2022. Remittances out of Mexico increased 19.5% last year to total $1.05 billion, or just 1.7% of the incoming amount.

Most of the incoming money — 99% of which was wired electronically in transfers that averaged $393 per transaction — came from the United States, where millions of Mexicans live. Analysts attributed the record inflow last year to the strength of the United States labor market.

Incoming remittances totals have been on the rise for a decade, and the inflow is predicted to grow again this year to reach between $66 billion and $68 billion, the El Financiero newspaper reported.

Although last year’s remittances total was a record, the annual growth in their value in percentage terms was the lowest since 2015.

Data from the research arm of the bank BBVA shows that Guanajuato was the largest recipient of remittances among Mexico’s 32 federal entities, with $5.41 billion flowing into the state last year.

Ranking second to sixth were: Michoacán, $5.4 billion; Jalisco, $5.35 billion; Chiapas, $4.36 billion; México state, $4.25 billion; and Mexico City, $3.86 billion.

According to BBVA, over half of the remittances sent to Mexico come from just two states — California and Texas, both of which have large Mexican populations.

Georgia, Illinois, Colorado, Florida, Arizona, New York and North Carolina are also significant sources of remittances, BBVA said.

The importance of remittances to the Mexican economy is underscored by the fact that their value last year was well above that of both oil export revenue ($33.21 billion) and direct foreign investment inflows ($32.9 billion in the first nine months of 2023).

President López Obrador frequently describes Mexicans working abroad as “heroes” given the large sums of money they send to their families.

Some migrants increased the amount of their transfers in 2023 to offset the appreciation of the peso, which began the year at around 19.5 to the US dollar and ended at just below 17. The dollar was trading at about 17.15 pesos on Friday afternoon.

Gabriela Siller, director of economic analysis at Banco Base, said on the X social media platform that remittances sent to Mexico last year lost 10% of their purchasing power due to the appreciation of the peso and “high inflation,” even though inflation declined throughout most of 2023.

“It was the first decline [in purchasing power] since 2013 and the largest since 2010,” she wrote.

With reports from El Economista, El Financiero and Proceso