In 10 years, remittances increased their participation in GDP by 154%

External income from workers’ remittances that the country receives has been increasing in recent years at rates higher than the growth of economic activity, which has led to its proportion with respect to the gross domestic product (GDP) reach a historical maximum of 2.8% in 2024, when a decade ago they barely represented 1.1% of GDP.

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This is mentioned in an analysis by Jorge Toro, editor of the Banco de la República blog, who mentions that after the 3% contraction that remittances experienced in 2020 due to the effects of the global economic crisis generated by the pandemic, in 2021 these had a notable rebound, reaching a growth of 24%, due in largely due to the aid that the governments where the emigrants reside offered to households to overcome the crisis.

Then, according to the analysis, they continued to grow at an average annual rate of close to 10%, and in 2023, the remittances received by the country exceeded US$10 billion for the first time.

The growth of workers’ income in Colombia has made them an increasingly important support for families in the country by reaching in 2023 3.6% of disposable income and 3.9% of household consumption.

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This aid is especially important because it is an income that is not subject to the fluctuations of the local economy, which in many cases allows households to cushion difficulties in situations of unemployment or other contingencies.

In addition to contributing to the maintenance of the home, remittances are also used for important purposes such as the education of children or investment in housing, whether for family use or to generate additional income for the emigrant’s home.

Several studies have shown that workers’ remittances are the result of a migration process. Hence the importance of highlighting the increase in the Colombian population residing abroad due to a significant migratory flow during the last decade, which has become particularly intense in the last three years.

It must be remembered that last June remittances exceeded for the first time US$1,000 million dollars monthly. This, in turn, has led to a sharp increase in the number of people who are receiving this aid in Colombia: from just under a million people in 2016, this figure rose to 2.1 million Colombians in June 2024.

Countries of origin

Colombian emigrants are located mainly in the United States and Spain. This is how in 2020, according to United Nations figures, 45% of the Colombian population residing abroad (not including Colombians living in Venezuela) was located in the United States and 25% in Spain. . Hence the relevance of trying to illustrate the economic situation of the Colombian population in those countries, since in addition to the number of emigrants itself, Remittances also depend on your income, occupations and opportunities to find work.

In this regard, it can be observed that the employment of Colombians in the US in activities related to services (which include “sales and office”) is significant and exceeds that of the average for all migrants.

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This represents an important benefit for Colombian migrants in that country, if one takes into account that the service sector generates more of 75% of the US GDP and that the unemployment rate in that sector is lower than that registered for the national total.

The analysis says that it is estimated that the average monthly value of the remittance per recipient has remained close to its historical amount, ranging between US$470 and US$506 per month.

HOLMAN RODRÍGUEZ MARTÍNEZ
Portfolio Journalist