Mexico: Remittance inflows remain healthy in January
Remittances totaled USD 2.2 billion in January, a 7.5% increase in year-on-year terms and below the 11.2% jump recorded in December. December’s figure had been in part buoyed by a temporary weakening of the peso relative to the U.S. dollar, with workers taking advantage of the favorable exchange rate at home for their dollar-denominated transfers. Growth in both the average amount remitted and the number of transfers contributed to January’s resilient headline figure.
In line with robust monthly developments and persistent tailwinds, remittances registered an all-time high figure of USD 28.9 billion in the 12 months up to January, a notch above the USD 28.8 billion figure recorded in 2017. January’s 12-month rolling figure was up 6.6% in year-on-year terms, matching the increase recorded in the 12 months up to December.
Remittance inflows are expected to continue trending upwards, buoyed by a very tight labor market in the United States. Although employment growth north of the Mexican border is expected to decelerate amid a nearly depleted pool of available skilled workers—thus weighing on growth in the number of transfers—rising compensation growth should continue to boost the average remitted amount and thus offset softer job growth. As such, remittances are expected to remain supportive of domestic private consumption growth in the foreseeable future.