Remittances sent to Mexico have best February on record… but there’s ‘bad’ news – El Financiero

Mexico captured 4 thousand 510 million dollars Remittances rose 3.8 percent year-on-year during February, adding to 46 consecutive months of expansion. Its advance was the biggest in four months, but analysts warned of signs of a slowdown in the flow.

“The moderation of the activity profile in the United States and the high remittance base should reduce flows to Mexico in the coming quarters,” explained Alberto Ramos, Latin America economist at Goldman Sachs.

The data also implies Its least pronounced advance since 2017According to data from the Bank of Mexico (Banksico).

In your month-to-month comparison, The amount of remittances has decreased by 1.4 percent, which ties into a two-month decline. Additionally, it has moved away from earning more than five billion dollars recorded in the nine months of 2023, Bank of Mexico.

In it First two months of the yearRemittance income totaled $9.85 million, also a historic amount, but its growth was the slowest for the same period since 2015, at 3.4 percent annually.

With the February figures, the Remittance

They combine 46 months of growth into 12-month flows. The above means that from March 2023 to February 2024, the Cumulative flow of remittance income It was $63,622 million, higher than the level of $63,459 million from February 2023 to January 2024.

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According to analysts of BBVA MexicoShowing signs of remittance slow down Which should be monitored.

“Between November 2023 and February 2024, the Remittance There was also very little increase with the risk of flow breakage rising streak“, they pointed out.

This becomes relevant if one considers this from May to December 2020 foreign exchange They have grown at an average annual rate of 11.4 percent. For 2021, they had their best performance in the past 15 years, rising 25.9 percent due to a rapid recovery. American economy.

Behavior under the microscope

Alberto Ramos, Latin America economist at Goldman Sachs, It is estimated that moderation Activity Profile in the United States And High remittance support should lead to moderation of flows to Mexico In the next quarter.

instead, Banorte Analysts They highlighted that there are factors that can support the entry of these currencies into the country. For example, expect favorable for Construction in the United Statess, which has positive spillovers Migrant Employment and decreasing predictions for inflation For the rest of the year.

“We will be very careful Development of electoral process in the said country. a lot Donald Trump as Joe Biden Recognized that The immigration problem It is the key to your campaign. We believe that Trump rhetoric

“It will remain aggressive, which could accelerate the flow, as it did in 2016,” they noted.

He added Between February 2021 and February 2024 On an average there were about 63 thousand monthly meetings Deportation, Arrest and Inadmissibility. “So, it’s worth continuing to monitor what happens to him Migration and Remittance in the following months”.

Citibanamex Analysts They assume that the Remittance They will continue to grow at a lower rate than observed in 2023, and they estimate an advance of 5.8 percent a year, from 7.6 percent the previous year.

What are the negative effects of ‘superweight’?

He added that the Flow of remittances Provides support for current accounts and private consumption, especially for Low income families Those who use it to consume it, but the significant appreciation of the Mexican peso against the dollar undermines that use.

Gabriela Siler, Director of Financial Economic Analysis at Banco Base, showing that February had accumulated 16 consecutive months in which Remittance They have lost purchasing power Before doing this An appreciation of the peso against the dollar and high inflation which prevails in Mexico.

He estimated that this amount Remittances are measured in pesos 4.7 percent annual decline, but if we add Effect of inflation The decline in this flow registered a decline of 8.7 percent.

Ramos maintained that remittances support the flow of current account and for Private useEspecially for Low income families who is the main recipient of this transfer. However, he noted that “The Significant appreciation of the peso eliminating the effect of Remittance on consumption

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Banorte Analysts They recognized that the Persistence of rising inflation in the US and Mexicoas well weight strengthThe purchasing power of these resources is limited.

for its part, Remittances sent by residents of Mexico abroad Showing a year-on-year expansion of 37.8 percent, it reached $111 million.

“With these results, Mexico’s Remittance Account Surplus With the rest of the world there was 4,399 million dollars, which was more than the 4,267 million dollars presented in February 2023,” Benxiko explained.

In the first two months of 2024, 98.7 percent of total income from remittances was done by Wire transfer, adding $8,965 million. Meanwhile, it Cash and kind operationsas well Money order They represent 1.1 and 0.2 percent of the total amount, each, the financial institution detailed.