Mexico: Remittances hit record high in 2016
February 1, 2017
Given a tight U.S. labor market, a weak Mexican peso and fears about the actions that President Trump could take against migrants, remittances increased 6.2% on an annual basis, totaling USD 2.3 billion in December (November: +25.1% year-on-year). December’s expansion brought remittances to a total of USD 27.0 billion in the full year 2016, which marked an 8.8% increase from 2015 and was above the previous record of USD 26.1 in remittances sent to Mexico in 2007.
In peso terms, remittances increased about 28% from 2015 as the Mexican currency hit an all-time low in the wake of the U.S. presidential election and again in January ahead of Trump’s inauguration. Mexican workers in the U.S. have taken advantage of the situation to boost the peso value of their U.S. dollar remittances, but also have frontloaded them on concerns about the implementation of measures that could hinder future transactions by the new U.S. administration.
Trump said during his campaign that he could use restrictions on remittances as a way to pressure Mexico into paying for the wall he plans to build along the Mexico-U.S. border. However, he has not, so far, mentioned it since the election. Although restrictions on remittances have not been included in Trump’s recent executive orders on border security and immigration enforcement, his insistence on building the wall has fueled concerns in the Mexican community in the U.S.
Author: Ricardo Aceves, Senior Economist