Family Remittances Decline

Remittances sent by nationals to the country began the second half of the year with a 1.0 percent annual contraction, totaling $5.6136 billion, according to figures from the Bank of Mexico (Banxico), due to the slowdown in employment in the United States.

On a monthly basis, remittances recorded a 9.6 percent drop compared to June, when a historic high of $6.2069 billion was reached.

With seasonally adjusted figures, meaning the elimination of exogenous seasonal factors of a non-economic nature that influence the behavior of monthly economic statistics, remittances fell 11.9 percent month-on-month, reaching $5.222 billion.

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This decrease was reflected in the recipient families, who received $402 in July, $17 less than the previous month.

Meanwhile, remittance income from January to July this year totaled $36.9401 billion, representing an annual growth of 2.9 percent, the lowest since 2013.

According to Juan José Li Ng, Senior Economist at BBVA Research for Mexico, this decline in remittance income could be due to the slowdown in employment growth in the U.S., which reduces the migratory flow to that country and, consequently, the sending of dollars to Mexico.

Janneth Quiroz Zamora, Director of Economic, Exchange Rate, and Financial Market Analysis at Monex Grupo Financiero, stated that remittances have been key to the strong dynamism of domestic consumption and the trajectory of the Mexican peso.

However, she noted that a moderation in flows is expected, with key factors being the August non-farm payroll figures, which will indicate the current status of the U.S. economy; the continuation of the disinflationary process; and the depreciation of the local currency, which could boost the purchasing power of remittances for Mexican families.