Remittances to Mexico proceed to interrupt information with US $5.56 billion despatched in August — the best ever determine for that month — however the sturdy peso means their buying energy is falling.
August’s determine represented an annual enhance of 8.6% and introduced complete remittances for January-August as much as US $41.46 billion, a 9.3% enhance from the identical interval in 2022, in response to knowledge from the Financial institution of Mexico (Banxico).
There have been 105.46 million particular person transfers on this interval, up 8.29% from the yr earlier than, whereas the common quantity of every switch elevated by 0.91%, to US $393.
Mexico has seen a regular upward pattern in remittances obtained for the reason that starting of the COVID-19 pandemic in March 2020, with almost 40 consecutive months of year-on-year will increase.
The expansion largely displays the power of the U.S. economic system. The USA is the supply of greater than 95% of remittances to Mexico, in response to 2021 statistics analyzed by the Wilson Middle, and U.S. wages are as much as ten occasions greater than equal wages in Mexico.
Economists estimate that remittances account for between 3.5% and 4% of Mexico’s GDP. President López Obrador has known as the 38 million Mexican staff within the U.S. “residing heroes” who help about 10 million poor households.
Nonetheless, excessive inflation within the U.S. additionally impacts Mexican staff there, leaving them with much less disposable earnings. Though August’s remittances have been the best ever for that month, they have been down 1.8% from the month earlier than.
Moreover, the appreciation of the Mexican peso this yr has eroded the buying energy of remittances despatched in {dollars}. Valued in pesos, August’s remittances in reality confirmed a 12.5% fall from August 2022.
A number of analysts who spoke to the newspaper El Financiero warned {that a} flagging U.S. economic system might carry the overall worth of remittances to Mexico down additional over the approaching months.
“If there’s a recession within the U.S., it’s inevitable that it’s going to negatively have an effect on Mexico’s earnings from remittances,” mentioned Jesús Cervantes, director of financial statistics on the Middle for Latin American Financial Research (CEMLA). “Even when the peso depreciates and home inflation continues to fall in Mexico, the annual comparisons will register year-on-year falls measured in pesos.”
With reviews from El Financiero and The San Diego Union-Tribune
