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Weekly Roundups

Remittances to Mexico Rise to Record High in May

By Andrea Villar | Thu, 07/01/2021 - 14:27

In May, remittances to Mexico rose to their highest monthly level since records began in 1995. The total amount received amounted to US$4.514 billion, surpassing the US$4.157 billion reported in March, Mexico’s Central Bank (BANXICO) data showed on Thursday. According to the bank’s board of governors, there are two factors behind the jump in remittances in May: Mother's Day and the economic rebound driven by the reopening of the US economy.

Transactions, led by the US, likewise hit a record high and rose 15 percent year-on-year, their second month in a row of double-digit growth, totaling 12.3 million. According to BANXICO, between January and May, the monthly average of transactions amounted to 10.6 million. The average amount per remittance was US$366, 14.3 percent higher than the US$320 dollars sent in May 2020. It was, however, lower than the US$375 that were sent on average in April this year. In 2020, remittances sent to Mexico totaled US$40.61 billion, 11 percent higher than the previous year.

In an article last week, Country Manager of Bnext  Cristian Huertas wrote for Mexico Business News that although the average remittance is about US$300, “when you dig into the data you will find that the vast majority of transactions are just over US$100.” He mentioned that in most cases traditional remittance companies charge fees that can amount to as much as US$10. In light of this, he added, a wave of fintech players have been launching more competitive proposals.

More news below:
 

  • The National Institute of Geography and Statistics (INEGI) reported this week the results of the National Occupation and Employment Survey (ENOE). The report indicates that Mexico's unemployment rate reached 4 percent in May, which means that a total of 2.3 million people are out of work. The report details that the economically active population, all people over 15 years old who work or are looking for work, amounted to 57.2 million people in May 2021. This implies a rate of 58.7 percent and represents an increase of 12 million compared to May 2020, when the health emergency confined a significant portion of the population.
     
  • High inequality and low growth threaten decades of progress in Latin America and the Caribbean, warns a recent report from the UN Development Program (UNDP). The report analyzes the concentration of power, violence in all its forms and the design of social protection and labor market systems and regulatory frameworks in the region. Latin America and the Caribbean are “in a development trap,” states the report. “Despite decades of progress, some of which could be wiped out by the COVID-19 pandemic, two characteristics of the region have remained largely undisturbed: high inequality and low growth.”
     
  • On June 29, the Labor Council of the USMCA met for the first time. During the meeting, US representative Josh Kagan stressed that they are “enthusiastic” about the Rapid Response Mechanism of the USMCA because it is a tool that helps to “ensure that the commitments of the chapter on work are not promises that are not kept.” This mechanism is an action guide for Mexico. When the US or Canada consider that there is a violation of workers’ rights in Mexico, the northern countries have a period of 30 days to determine if the complaint is admissible. Read all information here.

 

  • Mexico's factories deteriorated for the 16th consecutive month in June, the IHS Markit Mexico Manufacturing Purchasing Managers’ Index revealed on Thursday, rising to 48.8 in June from 47.6 in May. This is the highest reading since February 2020, but still below the 50 threshold that separates growth from contraction. “Firms continued to signal lower sales, falling production and job shedding, but tentative signs of a recovery in demand curbed the respective rates of contraction,” said Economics Associate Director of IHS Markit Pollyanna De Lima.
Photo by:   金 运, Unsplash
Andrea Villar Andrea Villar Journalist and Industry Analyst