## The Unexpected Rise in Remittances to Central America and Mexico During the Pandemic _IMF News, September 21, 2022_ ## Source details **Canonical URL:** [The Unexpected Rise in Remittances to Central America and Mexico During the Pandemic](https://www.imf.org/en/news/articles/2022/09/19/cf-the-unexpected-rise-in-remittances) ## Other formats - [Markdown version](/en/news/articles/2022/09/19/cf-the-unexpected-rise-in-remittances/index.md) - [Structured JSON version](/en/news/articles/2022/09/19/cf-the-unexpected-rise-in-remittances/index.json) - [Bundle manifest](/en/news/articles/2022/09/19/cf-the-unexpected-rise-in-remittances/bundle-manifest.json) ## Bibliographic details - Authors: Yorbol Yakshilikov September - Published: September 21, 2022 --- ### Overview - Remittances hit record levels in 2021 driven by rising US wages and unemployment insurance relief. - Remittances are a crucial source of income in Central America, Panama, and the Dominican Republic (CAPDR) as well as Mexico. - IMF staff research investigates why remittances from the US to CAPDR and Mexico remained resilient during the pandemic. ### An unexpected comeback - Economists predicted remittances to CAPDR and Mexico would decline by up to 20 percent given the fall in US employment at the onset of the pandemic. - Traditional macroeconomic models linking US labor market conditions with immigrants’ income: - Accurately predicted the deep but brief collapse in remittances observed in April 2020. - Failed to predict the strong comeback that followed in 2020 and the record levels in 2021. ### Explaining the surge - Pre-pandemic determinant: the number of remittance transactions—the volume effect—largely determined remittance levels. - The jump in remittances in the second half of 2020 resulted from: - An increase in the number of transactions (volume effect). - An increase in the average amount remitted per transaction (value effect). - Drivers of the volume effect: - Increase in the number of people sending remittances rather than new immigrants arriving in the US. - Shift to digital remitting due to lockdowns, increasing the number of transactions. - Drivers of the value effect (most important): - Rising US wages drove increases in average amounts remitted. - US government assistance through unemployment insurance relief supported incomes and compensated for loss of income. - A strong “altruism” motive: as COVID-19 cases rose at home, immigrants in the US sent on average more money home. ### Persistence in 2021 - Remittances remained strong in 2021 due to: - US labor market recovery. - Sustained growth in real wages. - By the end of 2021: - The service sectors where CAPDR and Mexican immigrants predominantly work recovered. - These sectors recorded increases in weekly earnings that were above the US average. ### A look ahead - Growth in remittances to CAPDR and Mexico is expected to slow as some extraordinary factors in 2020 and 2021 dissipate. - Over time, remittances are expected to grow because: - Immigration to the US continues to rise. - The average amount remitted grows in line with US wages. - If employment and wages remain strong in the US, remittances are expected to increase during times of hardship in Central America and Mexico, as immigrants help families back home. *Source: https://www.imf.org/en/news/articles/2022/09/19/cf-the-unexpected-rise-in-remittances* --- ## Content in this bundle - **wpiea2022092-print-pdf** - [wpiea2022092-print-pdf (Markdown version)](/-/media/files/publications/wp/2022/english/wpiea2022092-print-pdf.pdf.md){rel="alternate" type="text/markdown"} - [wpiea2022092-print-pdf (PDF)](/-/media/files/publications/wp/2022/english/wpiea2022092-print-pdf.pdf){rel="external" type="application/pdf"} --- ## References - [REGIONAL ECONOMIC OUTLOOK](https://www.imf.org/en/Publications/REO/WH/Issues/2022/04/22/regional-economic-outlook-for-western-hemisphere-april-2022) - [CAPDR REPRESENTATIVE OFFICE](https://www.imf.org/en/Countries/ResRep/CAM-Region) - [https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus) - [https://www.imf.org/en/publications/weo](https://www.imf.org/en/publications/weo) - [Global Economy in Crosscurrents of War and Technology](https://www.imf.org/en/publications/weo/issues/2026/07/08/world-economic-outlook-update-july-2026) - [https://www.imf.org/en/publications/gfsr](https://www.imf.org/en/publications/gfsr) - [Global Financial Markets Confront the War in the Middle East and Amplification Risks](https://www.imf.org/en/publications/gfsr/issues/2026/04/14/global-financial-stability-report-april-2026) - [https://www.imf.org/en/publications/fm](https://www.imf.org/en/publications/fm) - [Fiscal Policy under Pressure: High Debt, Rising Risks](https://www.imf.org/en/publications/fm/issues/2026/04/15/fiscal-monitor-april-2026) - [https://www.imf.org/en/publications/reo](https://www.imf.org/en/publications/reo) - [Asia and Pacific](https://www.imf.org/en/publications/reo/apac) - [Europe](https://www.imf.org/en/publications/reo/eu) - [Middle East and Central Asia](https://www.imf.org/en/publications/reo/meca) - [Sub-Saharan Africa](https://www.imf.org/en/publications/reo/ssa) - [Western Hemisphere](https://www.imf.org/en/publications/reo/wh) - [https://www.imf.org/en/publications/areb](https://www.imf.org/en/publications/areb) - [Getting to Growth in an Age of Uncertainty](https://www.imf.org/en/publications/areb/issues/2025/09/24/annual-report-2025) - [More Publications](https://www.imf.org/en/publications) - [Mexico](https://www.imf.org/en/Countries/MEX) - [US economy](https://www.imf.org/en/News/Articles/2022/07/11/CF-US-Economy-Inflation-Challenge) - [Central America](https://www.imf.org/en/News/Articles/2022/06/29/CF-Central-America-resilient-growth) - [https://www.imf.org/en/home](https://www.imf.org/en/home) _Source: https://www.imf.org/en/news/articles/2022/09/19/cf-the-unexpected-rise-in-remittances_