December 4, 2024
Remittances to Mexico decreased by 1.6% year-over-year in October 2024, marking the second consecutive month of declines, according to data from Mexico’s Central Bank (Banxico). This follows a 4.6% drop in September, making it the first two-month streak of negative growth since June 2013.
In October, Mexican nationals abroad sent US$5.72 billion in remittances, compared to US$5.82 billion in the same month in 2023. Despite this decline, October remained the third-highest month for remittance inflows in 2024, surpassed only by June’s US$6.21 billion and August’s US$6.08 billion.
From January to October, Mexico received US$54.08 billion in remittances, a 2.2% increase compared to the US$52.91 billion recorded during the same period in 2023. This growth was primarily driven by electronic transfers, which accounted for 99.1% of the total remittances, amounting to US$53.61 billion. Cash and in-kind transfers contributed US$368 million, while money orders made up US$104 million.
The number of transactions during the ten-month period reached 137 million, with an average remittance amount of US$394 per transaction, consistent with 2023 figures. In October alone, 14.8 million remittance transactions were recorded, averaging US$387 each—slightly lower than the US$397 average in October 2023.
Over the past 12 months, cumulative remittances totaled US$64.49 billion, down from US$64.59 billion reported in September. Banxico’s data highlights a trend of slowing growth, with five months in 2024 showing year-over-year declines: March (-3.4%), May (-1.0%), July (-1.3%), September (-4.6%), and October (-1.6%).
The slowdown in Mexican remittances coincides with broader threats to remittance flows in Latin America and the Caribbean, where remittances reached a record US$159 billion in 2022, as previously reported by MBN. For Mexico, remittances represent nearly 4% of GDP and are vital to the poorest 30% of households. In Central American nations like Nicaragua, Honduras, and El Salvador, they contribute up to 28% of GDP.
Upcoming US policy changes under President-elect Donald Trump could exacerbate these challenges. Promised mass deportations, targeting up to 1 million individuals annually, and proposed taxes on remittance flows could destabilize regional economies. Trump previously deported 1.5 million individuals during his first term, and stricter immigration enforcement may further erode economic growth and create balance-of-payment instability in Central America, said Ricardo Barrientos of the Central American Institution for Fiscal Studies.
Vice President-elect J.D. Vance’s WIRED Act, which proposes a 10% tax on remittance transfers, adds to the potential disruption. Sofía Ramírez, Director of México, noted that even if people continue sending remittances, reduced sender numbers would significantly impact communities reliant on these funds.
BBVA Mexico, a major player in the remittance market, attributes the deceleration to structural factors, including the integration of undocumented Mexican migrants into the U.S. labor market, which could temporarily affect remittance volumes.
Despite the recent slowdown, BBVA projects total remittances to Mexico will reach US$66 billion in 2024, up from US$63.32 billion in 2023. However, analysts caution that broader economic conditions and possible remittance taxes may influence remittance flows in the coming months.
Source: (Mexico Business News)
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