Remittances will further bolster Mexico’s economy

Significance

Mexico has overtaken China in having the second-highest remittance income in the world, behind only India, which receives around USD100bn per year. Growth has been uninterrupted, even by the COVID-19 pandemic; 95.5% of transfers in 2022 originated in the United States.

Impacts

• A US economic slowdown in 2023 would arrest job creation and wage pressures, reducing, but not halting, remittance growth.
• A nominally steady peso thanks to remittances would help to lower inflation, and eventually interest rates, more quickly.
• The president will exploit remittance growth politically, falsely presenting it and its effects as indicative of government successes.