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New High for Remittance Flows into Latin America and Caribbean

The World Bank has projected that remittance flows into Latin America and the Caribbean will likely reach a new high of $126 billion in 2021, registering a solid advance of 21.6 percent compared to 2020.

Mexico, the region’s largest remittance recipient, received 42 percent ($52.7 billion) of the regional total.

The value of remittances as a share of GDP exceeds 20 percent for several smaller economies: El Salvador (26.2 percent), Honduras (26.6 percent), Jamaica, (23.6 percent), and Guatemala (18 percent).

The adverse effects of COVID-19 and Hurricanes Grace and Ida contributed to higher remittance flows to Mexico and Central America. Other main drivers include recovery in employment levels and fiscal and social assistance programs in hosting countries, particularly the United States.

An increase in the number of transit migrants in Mexico and other countries, and the remittances they received from overseas to support their living and travel costs, appears to be a significant factor behind the strong increase.

In 2022, remittances are expected to grow at 4.4 percent, mainly due to a weaker growth outlook for the United States. Remittance costs: Sending $200 to the region cost 5.5 percent on average in the first quarter of 2021, down from 6 percent a year earlier.

Mexico remained the least expensive recipient country in the G20 group, with costs averaging 3.7 percent. But remittance costs are exorbitant in smaller corridors.

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