WASHINGTON, USA -- In 2013, remittances to Central America and the Caribbean increased over the previous year while remittance flows to South America and Mexico declined, resulting in flat growth for the region as a whole, according to a new report from the Multilateral Investment Fund (MIF), a member of the Inter-American Development Bank (IDB) Group.
The report, “Remittances to Latin America and the Caribbean in 2013: Still Below Pre-Crisis Levels,” indicates that last year the region received a total of $61.3 billion sent by migrants to their countries of origin.
"Remittance flows to Latin America and the Caribbean remain an important source of income for millions of poor and vulnerable families," said MIF general manager Nancy Lee. "Remittance recipients need more access to financial tools that will help them use remittances to save and make investments for their future in areas like education, housing, and starting and growing businesses."
The report notes that, as this sector has evolved, there is an increasingly wide variety of services available to remittance senders, allowing them to make transfers using bank accounts and debit and credit cards. However, in many countries in the region, cash withdrawals are still the prevailing option for receiving remittances, showing that financial institutions have business opportunities to offer payment and savings products tailored to customers’ needs and preferences.
Mexico remains the largest recipient of remittances in the region, with $21.6 billion, followed by Guatemala, with $5.1 billion. Colombia remained in third place with $4.1 billion; El Salvador was fourth with just under $4.0 billion; and the Dominican Republic fifth with $3.3 billion.
The United States is the source of about three-quarters of remittances to the region, followed by Spain. Accordingly, the recoveries of labor demand in the United States and in average wages of workers from Latin America and the Caribbean affected the growth of remittances to Central America and the Caribbean. However, reduced migration from Mexico to the United States was reflected in the drop in remittances to that country.
Meanwhile, the Andean countries are still affected by unemployment in Spain, especially in the construction and services sectors, which are important sources of employment for migrants from the region.
In the years before the financial crisis of 2008-2009, remittances to the region as a whole experienced average annual growth of 17 percent. After a record high in 2008 of $64.9 billion, there was a sharp drop in 2009 of over 10 percent, followed by an increase in 2011 of 6 percent, and subsequent stagnation that continued up to 2013.
The MIF estimates that remittances to the region could increase by 5 to 7 percent in 2014. This estimate is based on migration and labor trends in 2013 and on expectations for stronger performance in the US and European economies in 2014, already reflected in improved employment figures in the first months of this year.