(CNN Spanish) – Remittances – money that migrants send to loved ones in their countries of origin – are an important source of external financing for countries Such as Mexico, Colombia and Argentina. But what is its impact on the economy in Latin America?
In fact, remittances have been the main source of external financing for low- and middle-income countries (LMICs) since 2016 – excluding China – and remittances accounted for nearly three times the amount of assistance. Official Development (ODA) for more than a decade, according to Report published in May By the Global Knowledge Partnership for Migration and Development (KNOMAD) and the World Bank.
“Remittances are a lifeline that extends from developed countries to developing countries and serves to keep people in the countries that receive them,” said Jorge Godenez Reyes, Americas Director at WorldRemit.
Speaking specifically of Latin America and the Caribbean, remittance flows increased to $131,000 in 2021, an increase of 25.3% compared to 2020. And to me According to the World Bank, among the countries with double-digit growth in remittance flows are Guatemala (35%), Ecuador (31%), Honduras (29%), Mexico (25%), El Salvador (26%). ), the Dominican Republic (26%), Colombia (24%), Haiti (21%) and Nicaragua (16%).
according to konomad, Remittance flows (personal remittances) to Mexico rose to US$10.9 billion (25%) in 2021, compared to 2020. Why? Increasing transit migrants from countries such as Honduras, El Salvador, Guatemala, Haiti, Venezuela and Cuba, who, on their way to the United States, must pay for their travel “including fees to be paid for illegal border crossings”, refers to the report.
“We have observed that while three-quarters of remittance flows into the region continue to arrive from the United States, remittances within the region have increased due to the passage of migrants on their way north through Mexico and migratory movements toward Chile, Colombia, Costa Rica, Panama or the Dominican Republic.
For its part, KNOMAD The report also highlights the impact that the immigration policy known as Title 42 has had on increasing remittances to Mexico, bearing in mind that because immigrants cannot cross into the United States, they stay longer in Mexico and, therefore, need more resources .
According to figures from the Government of MexicoIn 2021, a total of 307,679 undocumented aliens were reported to Mexico’s immigration authority, an increase of 273% compared to the 82,379 reported in 2020.
The weight of remittances in Latin America
According to the World Bank, remittances account for at least 20% of GDP –broadest measure of economic activity– From several countries in Latin America and the Caribbean:
“The importance of remittances for all the people who receive them is that they are a livelihood channel,” Godines Reyes told CNN, noting that income from remittances for countries like Haiti, Honduras or El Salvador is more than 20% of their GDP. It is an indicator of the importance of remittances to families and countries’ economies.
The United States is the largest source of remittances for Latin America, so remittances are tied to the American economy. “The economy in the United States has a direct impact on remittances, because with more jobs in the United States or more growth, we see that there is a direct relationship in sending remittances,” Godines Reyes said.
a report konomad It is estimated that in 2022, remittances will grow by 9.1%. However, Godines Reyes noted that due to inflation in the United States, adjustments can occur in economies. “Both the transmitter and receiver will have to make adjustments to survive with what’s available. And that could slightly reduce the speed of growth we’ve been seeing,” he added.
The cost of sending remittances
according to According to the World Bank, the average cost of sending $200 to Latin America and the Caribbean was 5.6% during the fourth quarter of 2021, unchanged from the previous year.
The average cost of sending $200 to Latin America and the Caribbean remained at 5.6% during the fourth quarter of 2021, unchanged compared to the percentage recorded in 2020. Mexico remains the second lowest cost country (in the G20 beneficiary countries). .) at 4.3% conversion costs to send $200.