Friday, December 1, 2023

Remittances up 6.3% annually, reaching US $5B in April

Mexico’s remittance income in April reached US $5.003 billion, a 6.3% annual increase from the same month in 2022.

Nearly 4.9 million Mexican households and 11.1 million adults receive remittances from relatives abroad, according to figures from the Center for Latin American Monetary Studies (Cemla). In April, the Bank of Mexico (Banxico) reported 13.1 million remittance transactions, with an average amount of US $381 per transaction.

Banco del Bienestar branch in Mexico
In April, the government-run Well-Being Bank announced it would exit the remittance market, which experts worried would most affect the rural poor in the country. (Banco del Bienestar/Facebook)

However, Gabriela Siller, director of economic analysis at Grupo Base, pointed out that sustained appreciation of the Mexican peso, coupled with high inflation, means that the purchasing power of remittances to Mexico in fact shows an annual drop of around 10%. 

The last time such a sustained drop in the purchasing power of remittances was seen was a decade ago, between August 2012 and August 2013.

“This is relevant, because remittances are a determinant of Mexico’s consumption, so the loss of purchasing power of remittances will be reflected in a slowdown in consumption,” she said.

The face value of remittances to Mexico from other countries – primarily the United States – has shown year-on-year increases in almost every month since the start of the COVID-19 pandemic in March 2020, when remittance income surpassed US $4 billion for the first time.

Although April’s year-on-year increase is a record for a single month, remittance income through January-April showed a 10.1% increase from the year before, reaching a record US $19 billion across the four-month period. Electronic transfers accounted for 98.8% of transactions.

In early May, the government agency Finance for Well-being (Finabien) announced a new program to make it easier for Mexicans to send money back from the U.S. The program allows Mexicans to open dollar accounts in the U.S. using only Mexican identification papers, and then send money home directly via cell phones. It remains to be seen how this will affect overall remittance income.

President López Obrador is a vocal supporter of Mexican nationals who send home money from abroad, which is a major booster of Mexico’s economy, bringing in a total of nearly US $58 billion in revenue in 2022, a 13.4% increase over the 2021 figure.

With reports from La Jornada Maya and El País

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