Mexico: Growth in remittances leaps in July
September 1, 2017
Remittances totaled USD 2.5 billion in July, a 9.4% expansion from the same month last year. The result followed a 4.4% year-on-year increase in June. Aided by a healthy U.S. labor market and transitory effects linked to the weakness of the peso and concerns regarding the U.S. trade and migration policy agenda, the 12-month trailing sum of remittances totaled USD 28.0 billion in July, an 8.1% increase compared to the same period last year and the highest reading on record. The increase followed a 7.3% expansion in the 12 months up to June.
Remittance inflows, a key source of household income, remain one of Mexico’s brightest spots so far this year. Although growth in the number of transactions has lost momentum, this largely reflects the fading away of one-off tailwinds, while the upward growth trajectory seen in recent months in the average amount remitted suggests that compensation for Mexican workers in the U.S. is finally firming up. As such, remittances are expected to continue rising in the next few quarters, which will continue shoring up household spending in Mexico, in spite of multi-year high inflation.
Author: David Ampudia, Economist