Mexicans working abroad sent more than US $3.5 billion back home in July, a 7.2% increase compared to the same month of 2019.

The Bank of México reported that the total was the third highest level on record after March and June of this year.

Alberto Ramos, chief Latin America economist at Goldman Sachs, said the economic downturn and rise in unemployment in the United States, the chief source of remittances to Mexico, doesn’t appear to have impacted the flow of money south of the border.

Generous income support programs in the U.S., the exchange rate and a deep contraction of economic activity and employment in Mexico may have acted as both “push and pull drivers” of dollar remittances from the U.S. to Mexico, he said.

During the first seven months of 2020, remittances worth a record $22.82 billion were sent to Mexico, a 10% spike compared to the same period last year.

Analysts at the bank BBVA are forecasting that remittances will total about $39.4 billion in 2020, which would be an 8.1% increase compared to last year.

In August, the more than $3.5 billion in remittances was sent to Mexico in a total of 10.3 million transfers. The average amount sent in each transfer was $343.30.

An analysis by BBVA found that the main use of remittances by those who receive them is to purchase food and clothes. Spending on health care accounts for the next largest use of money received from family members abroad followed by the payment of debts.

The BBVA analysis said that spending on health care by Mexican families who receive remittances has likely increased during the coronavirus pandemic.

More money is currently flowing into Mexico in remittances than from each of foreign direct investment, tourism and oil exports.

Given the sharp economic downturn here – the central bank is forecasting that GDP could decline by as much as 12.8% in 2020 – money sent to Mexico from abroad is more important than ever for the millions of people who receive it.

Source: Milenio (sp)