NEWS AMERICAS, Washington, D.C., Tues. Dec. 19, 2023: Remittance flows to Latin America and the Caribbean are expected to experience an impressive 8% surge in 2023, reaching a staggering $156 billion.
That’s according to a recent report released by the World Bank. The report, titled ‘Migration and Development Brief 3.9,’ unveiled this promising news this week, highlighting the significant impact of a robust labor market in the United States on remittances to the region.
This surge in remittance flows represents a remarkable increase, surpassing the $100 billion mark for the third consecutive year. The United States’ improved labor market has particularly benefited Mexico, Central America, and South America, where remittance flows have experienced a substantial upswing. While remittances to the region still fall short of foreign direct investment (FDI) inflows, they have emerged as a stable source of foreign exchange over the past several years.
However, the report also suggests that the growth in remittances to the region is expected to slow down to 4.4% in 2024. Despite this projection, Mexico, the largest recipient of remittances in the region and the world’s second-largest, is poised to post record remittances of $67 billion in 2023, marking a remarkable 9.7% growth compared to the previous year.
For many smaller economies in the region, remittances play a crucial role as a source of hard currency. Guatemala stands as the second-largest recipient of remittances in the region, receiving a substantial $19.9 billion, followed by the Dominican Republic with $10.3 billion. Other countries in the region are also projected to receive significant remittance inflows:
Colombia: $10.8 billion
Honduras: $8.8 billion
El Salvador: $8.1 billion
Ecuador: $5.1 billion
Nicaragua: $4.7 billion
Brazil: $4.4 billion
Haiti: $4.2 billion
The growth of remittances varies widely across countries in 2023, with Nicaragua experiencing a remarkable 45% increase, driven by the country’s political situation. Other notable increases include Argentina at 26%, Peru at 14%, Guatemala at 9%, and Colombia at 7%. Meanwhile, Costa Rica and the Dominican Republic saw more moderate growth at 2%, and Jamaica experienced a minimal 0.6% increase.
While the report anticipates a slowdown in remittance growth for the region in 2024, largely due to an expected slowdown in GDP growth for the United States, it notes that the labor market in the U.S. is expected to remain strong, with stable unemployment levels. Consequently, remittances to Latin America are unlikely to be severely impacted.
Globally, remittance flows to low- and middle-income countries (LMICs) increased by an estimated 3.8% in 2023, reaching $669 billion. This represents a slowdown compared to the rapid growth seen in 2021 and 2022. The report projects a further moderation in the remittance growth rate to 3.1% in 2024, resulting in total inflows of $690 billion. Remittance flows to high-income countries have shown minimal change since 2021. In total, global remittance flows are estimated at $860 billion in 2023, marking a 3% increase from the previous year, though less than the growth observed in remittance flows to developing countries. The report anticipates that global remittance flows will maintain a nearly constant growth rate in 2024.
