The Inter-American Development Bank (IDB) says Caribbean countries will receive US$18.4 billion in remittances, with a two per cent growth, similar to that observed in 2023.
The IDB is projecting that remittances to countries in Latin America and the Caribbean will reach a historic high in 2024 despite growing at their slowest pace in 10 years.
In a new report released here, the IDB said that remittances are returning to levels of increase prior to the exceptional growth they showed during the COVID-19 pandemic.
It said if the trend continues, the region will receive US$161 billion in remittances in 2024, a five per cent increase compared to 2023.
Among Caribbean countries, the IDB report states that remittances to T&T and Haiti grew by 5 per cent, which was similar to that observed in the LAC region. For their part, the Dominican Republic and Jamaica showed the lowest growth rates in the subregion, due to the economic stability and growth they have experienced.
The report estimates that T&T could receive US$345 million in remittances in 2024. That compares to the $3.37 billion that Jamaica is projected to receive and the US$10.29 billion the IDB estimates will be received by the Dominican Republic in 2024.
The inflow of remittances in Caribbean countries represented 11.6 per cent of the remittances received by the LAC region as a whole, a similar share to that observed last year.
The aggregate remittances from this region come mostly from the United States (50.4 per cent), but in this case, a significant participation of remittances from Canada is also observed (10.2 per cent). In the case of Haiti, remittances that are classified as coming from “Other countries” (17.7 per cent) also stand out, of which an important part come from the Dominican Republic.
The Washington-based financial institution said estimated slowdown for this year is attributed to the combination of a lower human mobility in 2023 with a slower labour market growth for migrants abroad, coupled with a relative improvement in the economies of Central American and Mexican recipient countries, which reduces the needs of beneficiaries.
Meanwhile, devaluations in South American countries and a slower economic recovery have encouraged sending remittances to support families in this subregion.
“For their part, remittances received by the countries of South America show greater growth, motivated by the devaluation of currencies in several countries in this region, as well as the slower economic growth these countries experienced, factors that continued to encourage further growth in the flow of remittances to this part of Latin America and the Caribbean,” according to the IDB report.
According to the report, “The exchange rate data for the region indicate that, in aggregate, the currencies of Latin America and the Caribbean will have depreciated by 1.4 per cent, which means gains for recipients who can exchange the remittances received in dollars at a higher exchange rate.
“However, prices in LAC countries show a growth of 5.2 per cent, reducing the purchasing capacity of remittances received in this period. The combined effect of the gains generated by the higher exchange rate with the losses caused by inflation show that the purchasing power of remittances in LAC will have grown by only 1.3 per cent in 2024.”
The report states that Caribbean countries also showed a small gain of 0.4 per cent in the purchasing capacity of the remittances they received, due to the growth in prices (6.5 per cent) that slightly exceeded the gains that were generated with the devaluation of the currencies
In Central American countries, remittances will grow by 6.6 per cent, reaching $45.7 billion.
In contrast, the South American region will see a 9.1 per cent growth in remittance income, totaling US$31.7 billion.
The report also provides a detailed analysis of the profiles and behaviors of remittance senders and recipients. Although amounts sent vary by nationality, gender, and years of residence abroad, remittance amounts range from US$131 to US$648 monthly, representing between six and 23 per cent of migrants’ incomes.
The report also indicates that, at the subregional level, remittance flows during 2023 represented 9.2 per cent of GDP in the Caribbean countries, while in Mexico and South America this indicator is lower (3.2 per cent and 0.7 per cent respectively), values similar to those observed in 2023.
More than half of migrants report sending money to their mothers, and one in three sends money to their fathers.
Among men, the median remittance sent is US$300 monthly and this amount remains stable during the first 15 years, decreasing as a percentage of income as it begins to grow. For women, the rate of income allocated to remittances remains stable over time, leading to increased amounts sent over the years.
Surveys reflect the role of remittances in ensuring the standard of living for families in the countries of origin.
The IDB said 80 per cent of migrants indicate that the money is used for maintenance, including daily food, housing, and transportation expenses.
The second most common use is for medical expenses. Other purposes mentioned by more than half of respondents include education, savings, business, and real estate.
IDB: Why people send money
“The flows of remittances received in Latin America and the Caribbean have their origin in the work and income received by the millions of migrants in the countries where they reside.
In this sense, this section analyzes the migratory flows, employment and wages for migrants in the main destination countries–the United States, Spain and, to a lesser extent, those of other countries in the region.
On the other hand, the money sent by migrants is used mainly to complement the daily consumption of families that receive them.
Therefore, the behavior of the purchasing capacity generated by these flows of remittances for the receiving families is also analyzed for each country where they are received, accounting for variations in the exchange rates and inflationary pressures.
The most recent available comprehensive estimates of the total migrant population originating in LAC is from 2020.
These data establish that the majority of migrants from the region (59.5 per cent) are in North America, especially in the United States, while the second destination of this migration (26.3 per cent) is spread throughout the different countries of the region itself and the third destination is Europe (12.6 per cent), especially Spain.
