IIF Warns US Migration Shift Could Cut Remittances by 13% by 2026

The migration policy implemented by the United States this year is affecting both its own economy and those of Latin American countries, according to the economic research unit of the Institute of International Finance (IIF).

In its monthly report Global Macro Views, titled “Domino Effect of US Policies on Migration and Remittances,” the IIF estimated that every migrant employed in the United States typically generates around US$2,000 in remittances per quarter.

With the more restrictive migration policy currently in place, remittance flows are expected to gradually decline, falling by 3% to 4% this year compared to last year’s record levels. The downward trend will continue until remittances are projected to be 13% lower in 2026. According to the report, this would effectively erase the gains accumulated over previous years of growth.

The IIF, private funds, rating agencies, and insurers, emphasized that remittances will continue but at a reduced pace. While the analysis does not single out any country, Mexico has been the regional leader in remittance inflows over the past two years. In 2024, Mexico received an unprecedented US$64.7 billion in remittances.

If the IIF forecast materializes, a 4% decline in remittances this year would still leave Mexico with US$62.1 billion in inflows. By 2026, however, the projected 13% drop would mean a shortfall of US$8.4 billion compared to 2024, leaving remittances at US$56.3 billion, still positive but significantly reduced.

The report also underscored the impact on the US labor market. IIF Chief Economist Marcello Estevao and Latin America Research Director Martín Castellano explained that the contraction of the foreign-born workforce is already putting pressure on job creation and wages. Labor shortages are driving wage increases, particularly in the service sector, which had previously benefited from migrant labor to offset demographic challenges and an aging native population.

This shift comes after record inflows in 2022 and 2023, when migration helped ease post-pandemic labor shortages. Starting this year, however, migrant entries could fall by as much as 87% compared to 2024, or even turn negative if deportations outpace arrivals.

A separate analysis by the Federal Reserve Bank of Dallas, released in July, warned that the steep decline in migrants at the southern border combined with deportation measures could subtract 0.8% from US GDP in 2025.