By Anthony Harrup
MEXICO CITY–Mexicans residing overseas despatched residence a report $40.6 billion in 2020, up 11% from 2019 in opposition to expectations early within the 12 months that the influence of the coronavirus pandemic on economies and employment would result in a major decline.
Remittances to Mexico remained sturdy in December, rising 17% from the year-earlier month to $3.66 billion, the Financial institution of Mexico stated Tuesday.
“The sharp contraction of exercise and employment within the U.S. haven’t impacted in a visual means the circulation of remittances to Mexico,” Goldman Sachs’ chief Latin America economist Alberto Ramos stated in a report. “Document excessive remittances and commerce steadiness surplus…have greater than offset the lack of revenue from worldwide journey/tourism and certain led to a present account surplus in 2020 of greater than 2.5% of gross home product.”
Amongst possible causes for final 12 months’s enhance in remittances are that many migrant employees within the U.S. are employed in important providers that weren’t shut down, and that many have been eligible for U.S. stimulus applications, the World Financial institution stated in an October report.
A examine by the Financial institution of Mexico final 12 months stated Mexican immigrants within the U.S. may have acquired extra in authorities assist than their common wages in most states, together with states from which essentially the most remittances are despatched similar to California and Texas.
Another excuse was rising unemployment in migrants’ residence international locations.
“The pandemic actually confirmed us that there’s an excellent higher want throughout instances of stress like that…whether or not it is to Mexico or to different elements of Latin America, or India, or the Philippines,” stated Raj Agrawal, chief monetary officer at cross-border money-transfer and funds concern The Western Union Firm.
After sharp declines in April and Might, remittances to different elements of Latin America recovered later final 12 months and rose 4.8% to El Salvador, 3.8% to Honduras, 7.9% to Guatemala and 16% to the Dominican Republic, in contrast with 2019, in accordance with the Central American Financial Council.
The World Financial institution estimated in October that globally remittances would fall 7% in 2020 and an additional 7.5% this 12 months, together with an 8% drop in Latin America and the Caribbean.
“I believe that is a little bit bit pessimistic for what remittances will do that 12 months. We have not seen remittances decline like that for 2 years in a row, so I anticipate it should be most likely higher than that,” stated Mr. Agrawal.
Oxford Economics stated in a examine revealed final month that the outlook for remittances in 2021 is unsure, and “may fall anyplace inside a variety between a decline and a return to the pre-pandemic development constructive progress.”
On the upside, sturdy rebounds in remittance-sending economies, and slower recoveries in recipient nations, may encourage employees to ship extra money residence. Then again, new sources of remittances in 2020 similar to folks utilizing digital transfers as a substitute of carrying money in particular person due to journey restrictions could not proceed, and lots of migrants could have delayed returning to their international locations till this 12 months, Oxford Economics added.
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(END) Dow Jones Newswires