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Latin America & Caribbean

Remittances to developing countries decline for an unprecedented 2nd year in a row

Dilip Ratha's picture
We just launched the latest edition of the Migration and Development Brief and an accompanying Press Release.
 
Remittances to developing countries decreased by 2.4 percent to an estimated $429 billion in 2016. This is the second consecutive year that remittances have declined. Such a trend has not been seen in the last 30 years. Even during the global financial crisis, remittances contracted only during 2009, bouncing back in the following year.

Trends in Remittances, 2016: A New Normal of Slow Growth

Dilip Ratha's picture
Against a backdrop of tepid global growth, remittance flows to low and middle income countries (LMICs) seem to have entered a “new normal” of slow growth. In 2016, remittance flows to LMICs are projected to reach $442 billion, marking an increase of 0.8 percent over 2015 (figure 1 and table 1). The modest recovery in 2016 is largely driven by the increase in remittance flows to Latin America and the Caribbean on the back of a stronger economy in the United States; by contrast remittance flows to all other developing regions either declined or recorded a deceleration in growth.  

Remittances Market in Latin America: Will mobile money facilitate financial inclusion?

Sonia Plaza's picture
According to the recently-released Migration and Development Brief 26, Latin America and the Caribbean region achieved the most rapid growth in remittance inflows, which rose by an estimated 4.8 percent in 2015, owing to the recovery in labor markets in the United States.

In 2015 the cost of sending remittances to Central America and the Dominican Republic decreased

During 2015 the cost of sending remittances to Central America and the Dominican Republic was reduced.  This result, obtained from the database of Envía CentroAmérica, is a positive one as these countries are major recipients of remittances from abroad.  In fact, four of them -Guatemala, El Salvador, Honduras and the Dominican Republic - stand out among the top 25 emerging economies recipients of international remittances.

Remittances and Financial Inclusion: Evidence from El Salvador

Maria Soledad Martinez Peria's picture

While we know a lot about the impact of remittances on growth, investment, poverty, inequality, health, and education, the potential effects of international remittances on the domestic financial system and financial inclusion have not received much attention. There are several ways in which remittances could affect financial inclusion (that is, facilitating households’ access to and use of financial services). First, remittances might increase the demand for savings instruments. The fixed costs of sending remittances make the flows lumpy, providing households with excess cash for some period of time. This might potentially increase their demands for deposit accounts, since financial institutions offer households a safe place to store this temporary excess cash. Second, remittances might increase household’s likelihood of obtaining a loan. Processing remittances flows provides financial institutions with information on the income of recipient households. This information might make financial institutions more willing and able to extend loans to otherwise opaque borrowers. On the other hand, since remittances might help relax households’ financing constraints, the demand for credit might fall as remittances increase.

Are fewer Mexicans crossing the border to the United States?

Sonia Plaza's picture

Migration flows in both directions between the United States and Mexico have diminished according to recent statistics released by the Mexican and United States governments.

Mexican immigration to the United States began to decline in the mid-2006, and that pattern has continued into 2010. The Pew Hispanic Center analysis of Mexican government data indicates that the number of Mexicans annually leaving Mexico for the U.S. declined from more than one million in 2006 to 404,000 in 2010. Rand Corporation also found that the Mexican immigrants returning to Mexico have not increased despite the crisis. 

Helping Haiti through migration and remittances

Dilip Ratha's picture

A laudable measure that will benefit Haitians, more than any other aid and assistance, is the decision by the United States to grant them temporary protected status (TPS) for 18 months. This will allow about 200,000 Haitians currently residing in the US without proper documents to live and work here legally, without a fear of deportation. It would also allow them to send money home quickly and efficiently through formal remittance channels.

Haiti receives between $1.5-1.8 billion in remittances each year (some estimates are even larger, over a half of its national income).  If the TPS resulted in a 20 percent increase in the average remittance per migrant, we would expect an additional $360 million remittance flows to Haiti in 2010! What is more, if the TPS were to be extended once beyond the currently stipulated 18 months – the extension is almost certain to happen, judging by the history of extensions of the TPS for El Salvador, Honduras, Nicaragua, Somalia and Sudan – additional fund flows to Haiti would exceed a billion dollar over three years. That would be a billion dollar of financial help coupled with goodwill and advice, tailored to the needs of the recipient. Financial help in the form of remittances from family members abroad is always the first to arrive in times of distress. Remittances to Haiti this year will surge, as they have done whenever and wherever there has been a crisis or natural disaster (see paper).

Monthly remittances data update

Ani Silwal's picture

Latin America and Caribbean:

  • Remittances to Mexico declined 35.8% y-o-y in October. Year-to-date decline is 16.5%.
  • Remittances to Colombia declined 19.5% y-o-y in October. Year-to-date decline is 17.5%.
  • Remittances to Dominican Rep. increased 0.5% y-o-y in September. Year-to-date decline is 2.2%.
  • Remittances to Nicaragua declined 2.4% y-o-y in October. Year-to-date decline is 6.3%.
  • Remittances to Jamaica declined 6.0% y-o-y in October. Year-to-date decline is 14.6%.

Fall in remittances to Mexico in October - a data quirk

Sanket Mohapatra's picture

With Ani

According to the Banco de Mexico, remittance flows to Mexico declined 36% in October 2009 on a year on year basis, the largest fall ever recorded. A closer look at the data, however, shows that the latest number overstates the drop, as the same month last year saw an unusual surge in remittances as migrants took advantage of a sharp depreciation of the Mexican peso against the U.S. dollar to send additional remittances (see figure and blog post). 

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