Dec. 1 (UPI) — Money sent home from abroad to Latin America and the Caribbean is expected to hit a new record in 2025, reaching about $174.4 billion, according to a report from the Inter-American Development Bank.
If the projection holds, the region would mark 16 consecutive years of growth in money sent home by migrants, solidifying remittances as one of its main sources of external income.
The projected amount represents a 7.2% increase from 2024, when regional remittances were estimated at $162.7 billion, underscoring the resilience of these flows amid economic uncertainty, shifts in migration policy and slowing growth in developed economies.
The IDB report notes that despite this challenging environment, migrants have continued supporting their families through steady transfers that in some countries have even grown.
However, remittance trends for 2025 vary across subregions.
The report projects a 4.5% drop in transfers to Mexico, which despite the decline remains the region’s largest recipient with 35.4% of the total, or about $61.81 billion.
This decrease contrasts with strong projected growth in Central America, where remittances are expected to rise an average of 20.4%, driven mainly by Guatemala, Honduras, Nicaragua and El Salvador. Together, Central American countries are expected to receive about $55.395 billion by year’s end.
The development bank attributes Central America’s momentum to migrants’ responses to changes in U.S. migration policy and to uncertainty in the U.S. labor market.
During the first quarter of 2025, many migrants drew on their savings to increase the money they sent home, contributing to a 9.9% rise in remittances across the region during that period.
Later, in the third quarter, an increase in hours worked helped sustain these flows, while Central American women in the United States increased their participation in part-time jobs by 11.8% and in full-time jobs by 2.3% between April and July.
In Mexico’s case, the report points to structural factors behind the decline, including a 1.2% drop in the Mexican labor force in the United States and a shift in employment toward lower-paying part-time work.
Added to this is the statistical effect of an exceptionally strong 2024, when remittances were boosted by the depreciation of the Mexican peso, artificially inflating year-over-year comparisons for 2025.
For this year, some analysts suggest that a stronger peso may have reduced incentives to send money, although the development bank notes that the relationship is not linear because family obligations are typically measured in local currency.
Despite differences among countries, the report underscores that the United States remains the main source of remittances to the region. It accounts for 73.5% of transfers to Central America and 96% of those to Mexico, with shares above 90% in El Salvador, Guatemala and Honduras.
Even in countries such as Panama and Costa Rica, where sources are more diversified, the United States still accounts for more than 60% of the flows.
The development bank concludes that remittances remain a vital lifeline for millions of households in Latin America and the Caribbean, supporting consumption and reducing social vulnerability.
However, it warns that this resilience is not unlimited: potential migration restrictions, shifts in labor markets or higher transfer costs could significantly affect household income and regional economic growth.
COMMENTS
Please let us know if you're having issues with commenting.