Growth of remittances to Latin America will continue this year with a tendency to stabilize

Growth of remittances to Latin America will continue this year with a tendency to stabilize

Thousands of immigrants from Nicaragua, Guatemala, Honduras and Mexico poured the fruit of their labor into the United States to set new records for cash inflows as remittances to those four countries, which registered much higher percentages than other Latin American nations.

The rest of the countries, with the exception of Haiti and the Dominican Republic, also saw these cash flows grow, which contribute to the domestic economy and are the main support for millions of families, according to reports from the nations’ central banks.

In Washington, the expert Manuel Orozco, an authority in the study of remittances and their impact on the region, comments to the voice of america that this 2023 will not be the exception because they will continue to grow.

“Remittances will continue to show growth but with a less strong trend since the migratory intensity will be decreasing for all countries. The country that will have a less attenuated growth is Nicaragua, since this year the volume went from 2,000 to 3,000 million. However, with the exception of El Salvador, the countries will have a minimum growth of 10% this 2023”, predicts Orozco.

This expert points out that the year just ended marked some trends in the remittance behavior and consolidated some guidelines on the phenomenon whose base is sustained in the continuity of migrations.

From the analysis unit that he directs at the Inter-American Dialogue in Washington, they drew up the projections for the year adjusted with the quarterly reports of the central banks of the countries of the region.

El Salvador, for example –says Orozco- had a modest growth of 4% that is explained by the “migratory slowdown” in that country; Because the common denominator for the growth in remittance flows is the continuity of migration, says Manuel Orozco.

“For Guatemala, Honduras and Nicaragua, the growth that goes from 20% to 40% highlights the variations in the size of human mobility. Nicaragua registered a movement of more than 300,000 people, 5% of its population in 2022 and was reflected in remittances. The 20% growth for the other two countries also shows an effect with between 65,000 and 56,000 new remittance senders in one year,” Orozco explained to the VOA.

Families subsist only on remittances

Guatemala reported an increase in remittances up to November of more than 1.7 billion dollars, not including the month of December. The Central American country had received 16.398 billion dollars, the highest figure since these resources were counted. In 2021 it was 15,295 million, according to reports from the Bank of Guatemala.

In Honduras, the situation is similar, the Central Bank of Honduras reported that in the 11 months from January to November 2022, the state entity registered income from remittances of 7,933 million dollars. This meant an increase of 18.9% compared to the previous year, this without including the data for December. In 2021 this country received 6,669.8 million dollars.

Economist Alejandro Kaffati from the Honduran Council for Private Enterprise (COHEP) comments to VOA that despite the continuous growth of remittance flows, the country still shows high rates of poverty, and that 83% of the families that receive remittances -according to official surveys- allocate the funds only for maintenance.

“A really alarming fact is that 40% of the recipients of family remittances in Honduras have remittances as their only source of income (…) these have a double function, on the one hand they become a macroeconomic stabilizer, and on the other the other in stabilizing the levels of poverty and extreme poverty”, explains the economist.

In the case of Honduras, official figures indicate that up to 7 million Hondurans would be in the poverty and extreme poverty ranges, the money sent by their workers in the United States, therefore it is “a fundamental element for the well-being of families ” with this panorama, points out this economist.

Kaffati also points out as a weakness both for his country and for the neighbors in the region that up to now there is a lack of public policies “so that the income from remittances becomes once and for all an element of social advancement for households that receive them.”

Manuel Orozco also qualifies that in the analysis for the year 2022 the element of inflation in Latin American countries and how it has affected families should be included, and the response of workers in the United States would be in line with those needs.

“The growth of remittances came to support a difficult situation associated with the high cost of food prices in these countries as a result of the global inflationary trend. In this sense, the remittances complemented the local income and leveraged the expenses of imported products”, he pointed out.

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Written by Editor TLN

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