In November, remittances reached 53.139 million dollars; they exceeded the amount of all of 2021

The remittances that compatriots send to their relatives in Mexico registered a record figure of 53.139 million dollars between January-November 2022, revealed the Bank of Mexico (Banxico), which exceeded the amount that entered for this concept throughout the 2021.

In 2021, 51.586 million dollars of remittances entered the country.

The more than 53,000 million dollars that were registered between January-November 2022 is 13.5% more than the 46,834 million dollars reported in the same period of 2021.

If only November is considered, income from remittances totaled 4.801 million dollars, an annual increase of 3 percent.

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In this regard, Gabriela Siller, director of economic analysis at Banco Base pointed out, via twitter, that “Despite reaching a record high for a month of November, remittances fell 10.43% per month, a drop greater than the historical average of 8.44%. This is a sign of the economic slowdown in the United States and that in 2023 the annual growth of remittances will be less than in 2022”.

For its part, Banco Base explained that the monthly contraction of remittances is explained by the number of operations, which in November contracted 12.28% per month, reaching 12.2 million. In October, remittance operations reached a record high of 13.9 million.

continuous advance

If the accumulated flow of remittances in the last 12 months is considered, the amount reached a new historical maximum of 57.890 million dollars and threaded 31 months of progress.

However, the fact that the accumulated flow of 12 months registered in November a monthly growth of only 139.46 million dollars, well below the average monthly growth, which was observed in the first 10 months of the year of 616.6 million dollars, stands out.

Less pesos

The Banco Base report shows that when converting the figure from dollars to pesos, remittances received in November contracted 11.11% annually. This is the first month since March 2021 that a real annual decrease in remittances in pesos has been observed, and it is the largest annual drop since January 2018.

The fall was the result of the fact that, between November 2021 and November 2022, there was an appreciation of the peso against the dollar of 6.96% and annual inflation of 7.80 percent.

On the other hand, the Bank of Mexico reported that the amount of the average remittance fell 1.7% per year, accounting for 393 dollars.

The central bank detailed that 52,604 million dollars (99% of total income from remittances) were sent through electronic transfers, while operations in cash and kind, as well as “money orders” represented 0.7 and 0.3% of the total amount, respectively, being located at 375 and 159 million dollars.

Difficult to maintain 5,000 million dollars

The data for November also revealed that remittances cut a six-month trend, exceeding the level of 5,000 million dollars per month.

Luis Pérez Lezama, director of Economic Research at the Veracruz-based SAVER ThinkLab, told El Economista that it was difficult for the trend of 5 billion dollars a month to continue.

“The data of 4,801 million dollars in November, which we have not seen since April 2022, changes the dynamics and although we could no longer speak of a change in the trend due to less dynamism in the economy (in the United States) or an effect of less impulse for the total reduction of stimuli are issues that are already in the air and that sooner or later will bring back to historical levels of 3,500 or 4,000 million dollars”, he explained.

The interviewee added that to affirm that an economic slowdown in the United States is having a direct impact on the flow of remittances, it would have to be for at least one quarter.

We have to wait for January and December, which are the key months that are yet to come, but in summary we could not speak of an absolute change in trends (…) We are still in the upper part (of remittance income)”, he commented.

Luis Pérez Lezama estimates that the total amount for 2022 would be around 57,900 or 58,000 million dollars.

Banco Base projected that the flow of remittances in 2022 will be 58.290 million dollars, showing a growth of 13% compared to 2021.

The analysts of the financial institution detail that it is important to remember that the sustained growth of remittances is not an achievement of the Mexican economy, since it is about transfers of value generated abroad, mainly in the United States.

Remittances in 2023

Banco Base projected that by 2023 remittances will fluctuate in the 60,000 million dollars, this would be a growth of 7.4% more than expected for 2022.

The expected variation for 2023 is lower than expected for this year (13%) given the high probability that the United States will fall into a mild recession.

The research director maintains that this year will not be one in which big changes in remittances, inflation and economic growth are expected.

“We are going to see resistance zones (in remittance flows), but by the end of 2023 we will see calm between lower growth, a stronger drop in inflation and a more real level of remittances,” he said.

santiago.renteria@eleconomista.mx