Mexico: Remittances hit record high in 2017
February 1, 2018
Remittances totaled USD 2.6 billion in December, an 11.2% increase in year-on-year terms and a sharp contrast to the 4.7% drop recorded in November. It should be noted, however, that November’s contraction largely reflected a strong base effect stemming from a surge in remittances following the election of Donald Trump as U.S. President in November 2016. December’s strong figure was partly driven by a depreciation of the peso, which likely prompted workers to increase their remittance amounts to take advantage of the favorable exchange rate at home for their dollar-denominated transfers.
December’s expansion brought remittances to a record-high total of USD 28.8 billion in 2017, above the USD 28.5 billion registered in the 12 months up to November. The 2017 total represents a 6.6% increase from 2016, above the 6.2% increase recorded in the 12-month trailing sum in November.
The forces driving remittance flows remain robust, as the ongoing tightening of the U.S. labor market and positive developments in compensation dynamics should be conducive to further growth in remittances in 2018. Strong remittance inflows are likely to continue sustaining domestic household spending this year.
Author: Javier Colato, Economist