Remittances to Latin America and the Caribbean grew over 8% in 2017, according to new research by the Inter-American Dialogue

For Immediate Distribution
January 25, 2018 9:00 a.m.
Contact: Laura Porras
202-463-2935
press@thedialogue.org

Washington, DC – Remittances to seventeen countries in Latin America and the Caribbean in 2017 grew 8.5% to over $75 billion. Countries from Central America and the Caribbean, which handle nearly half of all flows, experienced over 10% growth in flows.
 
The factors behind this growth are varied, including more migration, more migrants sending more often, and/or more dollars sent per transaction. Migration from the region to the US represents the biggest flows, while migration to Chile, Costa Rica and Spain also plays a role. With regards to transactions, Guatemala, El Salvador, and Honduran migrants increased the amounts they sent during 2017. Honduras also saw increases in the frequency of sending. 

Other factors may also play a role in the growth, such as fluctuations in exchange rates, inflationary increases, spikes in demand for foreign labor, and externalities such as political events in the home and host countries.  

Manuel Orozco, author of the report and Director of the Migration, Remittances and Development program at the DC-based think tank, highlighted the economic importance of remittances. He noted that “in some countries, like El Salvador, Honduras or Guatemala, remittances may be responsible for half of overall economic growth. Their increase in 2017 amounted to 50% – 78% of total growth in these three countries.” This means that the overall economic growth experienced by these countries can be attributed mostly to growth in remittances. 

These flows continue to have substantial economic impacts in many Latin American and Caribbean countries, according to the report released this Thursday, January 25 by the Inter-American Dialogue. For ten countries, remittances represent over 5% of their GDP, and in the case of Haiti an impressive 34%. These countries also have a labor force that is mostly working in agriculture or the informal economy, activities that yield limited economic opportunities to its citizens.

The political landscape in the United States may have increasingly negative impacts on migrants and remittance recipient countries. These impacts could be substantial when analyzed under the scope of how dependent some countries are on remittances. For example, Salvadorans under Temporary Protected Status (TPS) contribute 12% of all transfers to El Salvador, and these volumes amount to 2% of the country’s GDP. If TPS holders are forcibly returned, the impact will be very negative for the Salvadoran economy, not to mention the challenges related to integrating those who are returning. Even those Salvadorans that decide to stay in the United States undocumented following the end of TPS are likely send less, since TPS holders currently send more than their undocumented counterparts. Haiti faces a similar fate with the loss of status for 40,000 Haitians.

Table: Remittances to Latin America and the Caribbean, 2017 growth (US$,000,000)

Source: Central banks data and INEC for Panama data. Est. are author’s estimates, except *: Central Bank data. Growth is 8.7% excluding Brazil. GDP calculations based on World Bank Data.

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