Remittances, with an upward streak of 40 months
During August, the country received 5,563 million dollars in family remittances, which meant an increase of 8.6% at an annual rate, according to the Bank of Mexico.
Thus, remittances accumulated a streak of 40 consecutive months of increases since May 2020.
In the reference month, 13.8 million operations were registered, with an average shipment of 403 dollars.
In the period from January to August, remittance income reached 41,459 million dollars, 9.3% more than that reported in the same period of 2022 when 37,941 million dollars were quantified.
Juan José Li Ng, economist at BBVA Mexico, highlighted that remittances to Mexico will continue to grow in the following months due mainly to the strong labor demand in the United States and the very important wage differential between both countries.
According to data from the recently published Mexico Migration and Remittances Yearbook 2023, it is estimated that a person with a high school education in Mexico has an average income of $328 per month, while a Mexican migrant in the United States with the same educational level earns on average 3,381 dollars per month; that is, 10 times more.
The document states that this year remittances will reach a record of 63.7 billion dollars, 8.9% more than in 2022.
By 2024, the forecast is that remittances will reach 67.9 billion dollars, which would represent an increase of 6.6% compared to 2023.
Despite the increases observed in remittance flows this year, households in Mexico have received fewer resources in real terms.
According to Gabriela Siller, director of Economic and Financial Analysis at Banco Base, by converting the 5,563 million dollars of remittances received in August to Mexican pesos, with an average exchange rate of 16.9766 pesos per dollar and adjusting the series by Inflation shows that the flow of remittances in August was 12.45% lower than that observed in the same month of 2022.
“This is the tenth consecutive month that an annual drop in real remittances measured in Mexican pesos has been observed.”
He recalled that the last time ten consecutive falls at an annual rate were observed was between August 2012 and August 2013, when they fell for 13 months in a row.
“The fall in the purchasing power of remittances in Mexico is the result of the fact that, between August 2022 and August 2023, the Mexican peso accumulated an appreciation of 15.63% and annual inflation was 4.64 percent.”
He estimated that considering the expected growth of remittances in dollars of 8.1% in 2023, an inflation projection of 4.6% at the end of the year, an average exchange rate of 17.3077 pesos per dollar in September and assuming an average exchange rate of 17.50 pesos per dollar as of October, it is projected that the purchasing power of remittances will show an annual contraction of 9.89% compared to 2022, being the first drop since 2013 and the largest since 2010.
- In each of the last four months, remittances have exceeded $5.5 billion.
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