Last year, remittances to Latin America and the Caribbean returned to the levels seen before the global financial crisis. Following the 13% drop in 2009, remittances sent by Latin American migrants showed modest growth rates until last year, when the increase picked up thanks to the recovery in the US labor market.
The trend is key for Latin America and the Caribbean, which - after Asia - is the region of the world where remittances mean most to the economy. For a third of Latin American and Caribbean countries, remittances account for more than 5% of GDP. The proportion exceeds 10% in Haiti, Honduras, El Salvador, Guatemala, Guyana and Jamaica.
Remittances are also important for some of the largest economies in the region. In Mexico, for instance, money sent by the 11.7 million migrants in the United States in March was the second most important source of foreign currency, after exports of manufactured goods and ahead of oil. However, although the jump in remittances to Mexico - a country that receives more than a third of the money sent to Latin America - boosts the regional average, the southern part of the continent is still far from recovering from the decline caused by the crisis. The importance of Spain among the countries of origin of remittances sent to South America means the flow of money has remained stagnant, especially to the Andean countries.
Moving forward, the factors that drove growth in 2014 are expected to strengthen. Higher employment and income in the United States will drive another 7% jump in remittances to Latin America and the Caribbean in 2015, according to projections from the Multilateral Investment Fund (MIF), part of the Inter-American Development Bank (IDB).
In this report we analyze the recovery in remittances to Latin America following the international crisis and the main factors driving it. In addition, we identify the effects on commissions resulting from the entry of more market players using new models of sending money based on technology. Finally, we analyze the effects on the market of new banking regulations in the United States and the opportunities arising from the easing of the embargo on Cuba, as announced in January by US President Barack Obama.