Mexico: Remittances shrink in November on U.S. election base effect
Remittances totaled USD 2.3 billion in November, a 4.7% decrease from the same month in the previous year and a marked contrast to the 19.0% surge recorded in October. The contraction was largely reflective of a very strong base effect caused by the election of Donald Trump as President of the U.S. in November 2016, which had prompted many Mexican workers in the U.S. to wire money across the border on the possibility that the forthcoming administration would implement measures that hinder remittances.
The 12-month trailing sum of remittances eased from the record-high of USD 28.6 billion in October to USD 28.5 billion in November. This represents a 6.2% increase compared to the same period of the previous year, below the 8.5% increase recorded in the 12 months up to October.
In spite of November’s figure, the 2018 outlook remains upbeat for remittances. The U.S. economy is expected to grow at a faster clip this year on the back of tax reform, upbeat manufacturing activity and a very tight labor market, which should fuel healthy remittances to Mexico. In turn, strong remittance inflows will continue to play a key role in sustaining domestic household spending in light of blistering inflation and tighter monetary conditions.