The world is slowly coming back after the pandemic. Remittances in Latin America and the Caribbean (LAC) have seen big changes. In 2023, remittances to LAC went up by nine percent from the year before.
This growth shows how important remittances are for the region’s economy. They help keep things stable and support development.
Countries like Mexico got a lot of money from remittances, US$60 billion. Guatemala and the Dominican Republic also saw big amounts, US$18 billion and US$10 billion respectively. The money sent back home is not just about the amount. It also boosts local economies.
In places like Honduras, El Salvador, and Haiti, remittances make up a big part of their GDP. They are as high as 27%, 24%, and 22% respectively.
If you want to learn more about remittances after COVID, our guide is for you. It covers the top service providers and trends in this market. Learn more about business money transfer to help with your remittance plans.
Understanding Remittances in Latin America and the Caribbean
Remittances are key to the economic growth of Latin America and the Caribbean. They act as lifelines for many families, boosting the region’s GDP. For example, remittances worldwide jumped from $100 billion in 1995 to over $740 billion in 2019.
In 2022, remittances to the region grew by 9.3%. This growth is vital for countries like Honduras, El Salvador, Haiti, and Nicaragua. Remittances in Latin America rose from 1.10% of GDP in 2010 to 2.58% in 2022.
A study shows remittances deeply impact households. Adams (1991) found that adding remittances to household income cut poverty by 9.8%. Adams and Page (2005) also found a 10% rise in remittances could lower poverty by 3.5%.
Remittances are significant for middle- and low-income countries, adding 5.04% to their GDP in 2020. Economic growth and exchange rates affect remittance flows. For example, weak currencies in Latin America can boost remittances, helping local economies.
Remittances do more than just send money; they help fight energy poverty, mainly in rural areas. In 2022, Latin America had 17 million without electricity and 75 million without clean cooking fuels. Migrant money transfers aid in economic growth, helping solve these issues.
Financial development and economic growth link remittances to energy poverty reduction. Digital payments’ rise boosts productivity and GDP per capita. Reducing remittance fees can improve economic trade and development. For more, see this guide.
Remittances do more than help families; they shape entire economies. They boost economic development and reduce poverty. Understanding these effects helps create policies that maximize the benefits of migrant money transfers, ensuring growth and stability in the region.
Guide to Latin America Caribbean Remittance Growth Post COVID-19
After COVID-19, remittances in Latin America and the Caribbean have grown impressively. Caribbean countries are expected to get US$18.4 billion in remittances in 2023, a two percent increase. By 2024, they will receive US$161 billion, a five percent jump from the year before.
This growth shows the region’s strong economic recovery. It offers important tips for other developing areas to follow.
Central and South America have also seen big increases in remittances. Central America is expected to see a 6.6 percent rise, reaching $45.7 billion. South America will see a 9.1 percent increase, totaling US$31.7 billion. These figures highlight the vital role remittances play in these economies.
The average remittance amount varies from US$131 to US$648 monthly. This is between six and 23 percent of migrants’ incomes. More than half of migrants send money to their mothers, and one in three to their fathers.
The median monthly remittance sent by men is US$300. This amount stays the same for the first 15 years and then decreases as their income grows. For women, the amount sent increases over time, even though it remains a stable percentage of their income.
Remittances are key for daily life in recipient households. An impressive 80 percent of remittance money goes to essentials like food, housing, and medical expenses. Other uses include education, savings, business investments, and real estate.
This pattern of spending offers valuable insights for governments and policymakers. It helps them support their citizens better.
The World Bank aims to lower remittance costs, aligning with their Sustainable Development Goals (SDGs). Lower costs can boost remittance growth, making these channels more resilient. To learn more about global remittance partners, visit the detailed guide on Palawan Express Cash Remittance Partners.
Remittance Service Providers: Wise and Currencies Direct
Choosing the right remittance service is key for smooth money transfers across borders. Wise and Currencies Direct are top choices. They offer fast, affordable services for millions worldwide.
Wise remittance services are known for being clear and cheap. In Q4 2023, the global cost of sending money was about 6.4%. Wise aims to keep rates low, often around 1%. This lets people keep more of their money.
Wise uses a fair exchange rate, so customers don’t face hidden fees. It’s also great for those who like online transactions. Money is sent online and goes straight to bank accounts or mobile wallets.
Currencies Direct is known for its personal service and wide range of financial products. It’s popular in Europe for its no-fee transfers, good exchange rates, and a personal account manager. This makes it a top choice for those who value good service and support.
The remittance market grew to USD 656 billion in 2023, with more growth expected. Digital remittances cost about 5% on average. Wise and Currencies Direct are cost-effective and reliable options for sending money. As the market changes, picking the right remittance provider is more important than ever for efficient and affordable transfers.
