Economic Growth and Family Remittances to Central America in 2018

Falco Ermet/ Flickr/ CC BY 2.0

General trends in 2018

Central American economies continue to struggle with achieving higher rates of economic growth of over 4%. The sluggish growth continues to limit the ability of these countries to achieve economic development and prevent emigration in the long term. Of particular relevance is the fact that these economies are highly dependent on a small number of economic activities, and remittances is a central, if not the most important source of income.

Family remittances to the region continued to grow in 2018, but inflows exhibited a slower growth of 8.6% compared with the 12% registered in 2017. The slowdown is associated with a reduction in emigration from the region to the United States and increases in intra-regional migration, as well as with political crises, particularly in Nicaragua.

The Nicaraguan crisis, migration and remittances

With the political crisis affecting the economy, which registered a contraction in 2018 to the tune of -4.1% (according to data from the United Nations Economic Commission for Latin America & Caribbean (ECLAC)), remittances are of increased importance.

Guatemala’s migration and remittance growth

Guatemala is the only country in the Northern Triangle that has shown greater migration. In a survey of Guatemalans in 2018 in the US, 4% said they arrived in 2018. Migration for Guatemala has shown higher numbers than from El Salvador or Honduras due to a combination of factors affecting the country. Particular drivers of Guatemalan migration include persistently high levels of extortion and violence, the political crisis over election campaign financing, corruption, and the president’s alleged abuses of authority.

Panama as a remittance sending country

Another important feature of Central American remittances is Panama’s participation in the regional remittance sending landscape. Until a few years ago, Panama did not have a large migrant population. However, since the reconstruction process of the Panama Canal and the global economic recession, and more recently the political crises in Colombia, Venezuela, and Nicaragua, immigration and remitting has increased.

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Read de full text in Latin News- Latin American Economy & Business, February 2019

 


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