El Salvador sees remittances rise in Jan-Sep

Wednesday, October 19, 2016

Salvadorians received US$3.34bn in remittances from friends and family members abroad in the first three quarters of 2016 – a 6.1% increase over the same period of 2015.

In September, remittances reached US$363mn or a 4.7% year-on-year increase for the month, according to a report from El Salvador's central bank, which also suggested that lower unemployment in the United States was making resources more available to migrant workers.

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The report noted that while US unemployment rose to 5.0% in September and unemployment of Latino workers rose 0.6% to 6.4% month-on-month, the latter is still a 0.1% improvement over September 2015, and 156,000 jobs were created last month.

Most remittances to El Salvador originate from the US, where nearly 89% of the country's migrants reside.

Year-to-date data through September reflects 17.1mn transactions – 3.8mn of which were to add credit to local mobile phones from abroad. Salvadorians are increasingly using their phones to make payments, known as M-payments.

The remaining 13.3mn operations were money transfers, a 7.4% year-on-year increase.

Over this period, banks paid out US$1.69bn in 6.4mn operations, or 50.7% of all transactions, while co-ops, agents and other firms carried out another 46% of the total, with the remainder reflecting trusted individuals bringing the money into El Salvador personally.

Remittances – the nation's second largest source of external income after exports – reach 1.3mn people in the nation, according to a 2014 government study.

Direct foreign investment in El Salvador has also been on the rise, showing solid results for H1 2016.