In 2023, Latin America and the Caribbean anticipate a significant increase in remittances, reaching an all-time high of $155.908 billion.
This marks a 9.5% rise from the previous year. The region’s dependency on these funds varies, highlighting economic disparities.
Central American countries expect remittances to form 12.7% of their GDP in 2023.
South America, in contrast, projects a modest 0.7%. This data comes from the Inter-American Development Bank (IDB).
Focusing on major economies, Mexico shows a notable reliance. Remittances there will constitute 3.9% of its GDP.
Colombia’s remittances contribute 3% to its GDP, compared to just 0.2% for Brazil and Argentina, and 0.1% for Chile.
Nicaragua stands out in the region.
It is projected to be the most reliant on remittances, expecting them to account for 29.7% of its GDP. The study excludes Cuba and Venezuela due to data limitations.
Other countries also show varied impacts of remittances on their GDPs.
Honduras, El Salvador, and Jamaica have significant percentages, whereas countries like Uruguay, Panama, and Costa Rica have minimal reliance.
The United States is a key remittance source for many Latin American nations.
Mexico receives most of its remittances from the U.S., and Central American countries also get a large portion from the U.S., with some exceeding 90%.
In South America, the U.S. continues to be a primary remittance source, with countries like Ecuador, Guyana, Peru, Colombia, and Uruguay relying significantly on it.
Paraguay and Bolivia, however, receive most of their remittances from Spain and other Latin American countries, respectively.
Varying impacts of remittances
The World Bank reports that Latin America is the second-largest recipient of remittances globally.
The rise in these remittances is influenced by increased Latin migrant employment in the U.S. and economic recovery post-pandemic.
However, the cost of sending money remains high, with banks being the most expensive method.
In conclusion, remittances play a crucial role in Latin America’s economy.
This reliance varies across the region, reflecting economic diversity and highlighting the importance of international employment and economic conditions.
Other countries in the region also show varying impacts of remittances on their GDPs for 2023, as estimated by the IDB:
Nicaragua: 29.7
Honduras: 27.3%
El Salvador: 24.3%
Jamaica: 20.6%
Guatemala: 19.5%
Dominican Republic: 8.3%
Guyana: 6.9%
Ecuador: 4.4%
Suriname: 4.3%
Belize: 4.2%
Bolivia: 3.4%
Peru: 1.6%
Paraguay: 1.4%
Trinidad and Tobago: 1.2%
Costa Rica: 0.9%
Panama: 0.6%
Uruguay: 0.2%