4 South American countries boost their economies with more than US$10 billion in remittances

Migration to stronger economies was a common denominator after the horrific onslaught of the Covid-19 pandemic.

According to the United Nations World Migration Report 2022, there were about 281 million international migrants worldwide at the end of 2020, representing 3.6% of the world’s population.

The same report states that by 2020, just over 30 million Latinos will live outside their region, with the United States leading the way with 25 million migrants.

More generally, and outside of the migration phenomenon, there are 62 million Latinos living in this country, according to the U.S. Census.

These figures show that remittances to the region’s countries will perform healthily yearly, especially in 2022, when the dollar’s strength has devalued local currencies.

Bloomberg Linea studied the indicators of international remittances in Colombia, Ecuador, and Peru and found that the economies of these countries have already received US$10.221 billion in remittances.

Venezuela also appears in the report, although the figures vary depending on the information.

COLOMBIA LEADS THE WAY

According to the Bank of the Republic, the Andean country received a total of US$6.122 billion through August 2022, making it the country with the highest foreign exchange receipts in the analysis.

By 2021, for example, remittances would represent 2.7% of gross domestic product (GDP), while in 2014, this figure was 1.1%, according to an article by the central bank.

ECUADOR MAINTAINS ITS LEVEL

According to reports from the Ecuadorian Central Bank (BCE), between January and June of this year, US$2.263 billion in international remittances flowing into the country, with a better result in the second quarter of 2022.

Between April and June, remittance flows to the country amounted to US$1.160 billion, an increase of 5.15% compared to the first quarter of 2022 (US$1.103 billion) and of 6.67% compared to the second quarter of 2021 (US$1.087 billion).

For the ECB, this increase in remittance flows is explained mainly by the rise in employment in the United States and Europe and “a greater inflow to these latitudes.

This can be explained by the lack of jobs and employment opportunities during the Covid-19 pandemic, which would have forced many Ecuadorians to migrate to other countries.”

In addition, the Central Bank highlighted in its report that official sources in these countries indicate that remittance flows “come mainly from informal activities.”
Peru maintains flow but records low growth in remittances

The latest report from the Central Bank of Peru (BCR) indicates that the country received US$1.835 billion in this type of transfer, also defined as family income, in the year’s first half.

The country received US$906 million in the first quarter and US$929 million in the second quarter, an increase over the same periods last year (US$852 million and US$919 million, respectively).

However, growth rates have been slow.

For example, the figure in the second quarter was 1.1% higher than in the same period of 2021 and 2.5% higher than in the year’s first quarter.

Remittances to Peru also come mainly from the United States, Spain, and Argentina.

In the United States alone, US$432 million came between April and June.

The slowdown in remittances, not only in Peru but in Latin America in general, will be affected by the economic downturn, as will exports and tourism, according to a recent publication by the International Monetary Fund (IMF).

THE CASE OF VENEZUELA

Like others in the country, this indicator is not monitored by the government but by private companies, international organizations, and study and research centers.

For this reason, migrant remittances were estimated at US$3.5 billion in 2021, equivalent to about 5% of Venezuela’s GDP, according to the ECLAC macroeconomic report.

Until 2022, however, it is impossible to establish a cumulative figure reflecting the volume of remittances flowing into the country.

However, various private analyses estimate they will increase by more than 45% this year, exceeding US$4.7 billion.

However, according to Zoom, formal and recognized remittances amounted to US$12 million by June and would reach US$22 million by the end of the year.

The company pointed out that to be recognized as remittances, this type of current transfer must be registered in the balance of payments of the country’s central bank.

Still, most transactions come through private companies, facilitating payment.

A study by the Center for Latin American Monetary Studies (Centro de Estudios Monetarios Latinoamericanos, Cemla) found that 85% of Venezuelan migrants send monthly remittances to their families, with remittances mainly from the United States averaging US$212.

THE OUTLOOK FOR LATIN AMERICA

In 2021, the region received US$131 billion, one of the highest growth rates in the last 20 years.

By mid-2022, according to the World Bank, the flow of remittances to low- and middle-income countries will increase by 4.2% this year, reaching US$630 billion globally.

The region’s growth would be 9.1%, with nearly US$143 billion coming into the various economies.

By the first half of 2022, Latin America has already received US$53.4 billion, according to Bloomberg Linea’s calculations, representing 37% of this forecast in the first half of the year, according to the official reports of each country.

With information from Bloomberg in linea