"10% drop in remittances to Mexico in July reflects impact of the labor market in the U.S."

The reception of remittances in Mexico experienced a notable slowdown in July 2024, with a 10% decrease compared to the previous month. According to the Bank of Mexico, the country received $5.614 billion in remittances, a figure that contrasts with the $6.2 billion reported in June. This decline not only represents a month-over-month decrease but also implies a slight setback of 1% compared to the same month of the previous year when $5.668 billion was received. The report from the Bank of Mexico reveals that during the seventh month of the year, a total of 14 million transactions were made, with an average remittance of $402. Despite the drop in July, the total remittances for the period from January to July of this year amount to $36.940 billion, representing an increase of 2.9% compared to the same period last year. This scenario suggests that, despite the decrease in July, the overall flow of remittances remains robust on an annual basis. More than 96% of these earnings come from the United States, reaffirming the importance of this country as the main source of remittances for Mexico. The vast majority of transactions have been made through electronic transfers, which account for 99% of the total, with an accumulated amount of $36.572 billion. In contrast, cash and in-kind remittances constitute only a smaller fraction of the total, at 0.8% and 0.2%, respectively. Gabriela Siller, director of Analysis at Banco Base, has pointed out that this drop in remittances can be attributed to the deterioration of the labor market in the United States, which could affect the ability of migrants to send money to their families in Mexico. This aspect highlights the interconnection between the economies of both countries and how labor conditions in the north directly influence the Mexican economy. The impact of remittances is significant in the national economy, considering that around 12 million Mexicans live in the United States. According to projections from BBVA, it is estimated that this year remittances will reach a total of $66.5 billion, which would account for 3.7% of Mexico's Gross Domestic Product (GDP). Additionally, approximately 6.1 million people in the country directly depend on these resources, underscoring the economic relevance of these financial flows. Historically, remittances to Mexico have shown remarkable growth. Between 2019 and 2023, they increased by an astonishing 70%, rising from $37.3 billion to $63.3 billion. This trend has led Mexico to become the second-largest recipient of remittances globally, surpassing China, a position it has maintained since last year. During his administration, President Andrés Manuel López Obrador has consistently praised the high amounts of remittances, considering them a fundamental pillar for the country's economy. In his recent government report, AMLO thanked migrants for their contribution and highlighted that the money sent by them has become the primary source of income for many Mexican families. The growth trend of remittances in Mexico is not an isolated phenomenon but part of a broader boom in Latin America. According to data from the World Bank, remittances to the region increased by 8% last year, reaching $155 billion, and are expected to continue growing by 2.7% this year. This context suggests that, although July showed a decline in remittances, the overall outlook remains optimistic. Remittances will continue to be a crucial source of support for millions of families in Mexico, and their stability is essential for the country's economic growth in the near future. Fluctuations in money transfers from abroad will continue to be a key indicator of economic conditions in both Mexico and the United States, demanding ongoing attention from analysts and policymakers.