Mexico City – Money sent home by Mexicans working abroad continues to trickle in at a slow but steady pace. In February 2024, these remittances, as they’re called, increased by 3.7% compared to the same month last year. This follows a record-breaking 46 months of uninterrupted growth.
However, between November 2023 and February 2024, the growth of remittances slowed down, with increases of 1.2%, 2.2%, 3.1%, and 3.7% respectively. Over these four months, the average annual growth rate was 2.6%.
Despite the overall positive trend, there’s a downside. The strengthening of the Mexican peso and inflation mean that Mexican families are actually receiving less money in real terms. Their purchasing power has decreased by 8.8% compared to the previous year.
This mixed picture of rising remittances and falling purchasing power highlights the complex financial situation for Mexican families. Some communities reliant on remittances have had to cut back on spending due to the stronger peso. At the same time, some workers in the U.S. are trying to send more money home to counteract the effects of the exchange rate.
Remittances are now Mexico’s largest source of foreign income, surpassing tourism, oil exports, and most manufactured goods. The United States remains the primary source of remittances for Mexico, contributing over 96% of the total amount in 2023.
With reports from BBVA Research.