Mexico’s Remittances Drop by Almost 30 Percent in April

During the month of March, remittances exceeded US$3 billion for the third time in the history of the country and hit the highest figure since 1995 according to data from Banxico. However, the figures for the month of April were not so encouraging. According to Banxico, figures barely reached US$2.8 billion, which symbolized 28.6 percent less than the historical month of April.

However, when these figures are compared with the same period in April last year, they tell us a very different story. In April 2019, Mexico received just over US$2.9 billion, meaning the difference in remittances received compared to last year was only 2.6 percent less. It should be noted that Mexico has only exceeded the historical record of US$3 billion in three occasions, the first time was in May 2018, with US$3.2 billion, the second time in June 2019 with US$3.1 billion and the third time in April 2020, according to a note by El Economista.

Remittances are a monetary flow that is correlated with global migration flows. Because of this, according to a BBVA report, Mexico is on the list of the main remittances’ recipients worldwide, along with countries like India, China, the Philippines, France and Nigeria. While countries like the US and others in Western Europe are ranked as the largest remittance senders in the world. In addition, Mexico, according to World Bank figures, is the fourth country that receives more remittances worldwide, with 5.1 percent of the total, surpassed only by India, China and the Philippines.

Remittances, in addition to being a strong source of income for Mexico, have also proven to be an aid to the country's economic development. Diego Spannaus, Head of Global Trade and Receivable Finance LAM at HSBC, said in an interview with MBN that "exports and external cash flows such as foreign direct investment and remittances suggest that the external factors impacting the Mexican economy remain in check."

For others, remittances have been a key factor to drive development when investments are not at their best. Enrique Covarrubias, Chief Economist at Grupo Financiero Actinver said in an interview with MBN that "consumption in Mexico has been quite successful in recent years given certain characteristics of the local market such as demographic benefits, formal employment and remittances.”

Finally, the Migration and Remittances Yearbook, carried out by BBVA Mexico and the National Population Council, estimates that by the end of 2020, remittances will reach a figure of US$37.2 billion at the end of the year and that growth of 5 percent with respect to the previous year will be maintained.