Mexico Faces GDP Impact From US Immigration Changes, IMF Warns

United States immigration policies could lead to a decline of up to 0.9 percentage points of Mexico’s GDP in remittance inflows over a five-year period, according to economists at the International Monetary Fund (IMF).

In the conclusions of its annual Article IV consultation with Mexico, the IMF noted that such a decline in remittance income could particularly weaken internal demand and consumption, especially in states like Chiapas, Oaxaca, and Guanajuato, which are highly dependent on these funds.

Remittances from the United States are a vital income source for many Mexican households, representing around 4% of Mexico’s GDP in 2024. Most originate from US states with large Mexican-born populations. In 2022, California, Texas, Arizona, and Florida accounted for roughly 50% of total remittance flows.

The report highlighted that, over the past two decades, the United States has averaged about 300,000 deportations per year. However, the Trump administration has announced plans to increase that figure to one million annually, with a medium-term target of deporting 10 million undocumented individuals.

Such measures could cause remittances to fall between 0.1% and 0.4% of Mexico’s GDP, the IMF estimated. A state-level analysis suggests the decline could be significantly larger in certain regions. For example, remittance inflows to Guerrero and Chiapas could decrease by as much as four times the national average.

These states, where poverty rates are higher and dependence on remittances is greater, receive funds that represent more than 10% of local GDP in places like Guerrero, Chiapas, Michoacan, Zacatecas, and Oaxaca.

The recently enacted Great and Beautiful Law has expanded resources for US Immigration and Customs Enforcement (ICE) and border control operations, including more agents and detention centers, making a rise in deportations likely in the coming months.

Nonetheless, IMF experts noted that the return of Mexican workers with advanced skills in machinery and equipment handling could partially offset the economic impact, as many may find employment opportunities in northern Mexico.

The IMF also warned that a reduction in remittance inflows “could lead to a slight deterioration in the current account of the balance of payments.”