What Is the Outlook for Remittances to Central America?
Guatemala’s remittances topped $18 billion last year, an amount that exceeded the total value of the country’s income from exports, Agence France-Presse reported Jan. 7, citing central bank data. What is the outlook for remittances to Guatemala and other countries of Central America this year? What are the most important forces driving the flow of remittances to Central America? How critical are remittances to the region’s economies, and what steps can policymakers take to ensure economic stability should remittance flows decline?
Manuel Orozco, member of the Financial Services Advisor board and director of the Migration, Remittances and Development Program at the Inter-American Dialogue: “Remittances to Central America grew last year to $38 billion, that is 23.5 percent of the GDP of Guatemala, Honduras, El Salvador and Nicaragua. The increase is one of the largest in the history of these countries since 2000. Nicaragua experienced more than 40 percent growth, followed by Guatemala and Honduras with 20 percent growth each. The increase is largely due to the outflow of migration from the region during this period, when 250,000 new remittance senders in 2022 added to the amount of money being transferred. Some nationalities also increased the amount of money they sent by each person, either by the number of times or the amount. This year, the growth is unlikely to follow the same pattern because migration continues to slow, and the number of new senders will not increase correspondingly. However, policymakers need to focus on…”Read More
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Covering Latin America’s banking and insurance sectors, remittances trends and data, micro lending issues, new technologies in the industry, anti-money laundering regulations, and much more, the Inter-American Dialogue’s biweekly Financial Services Advisor, a sister publication of the Latin America Advisor, gives readers fresh insight and diverse viewpoints from financial sector leaders. To subscribe or for more information, contact Erik Brand, publisher of the Advisor, at email@example.com.