Mexico’s Record Remittances Are Helping to Prevent Consumer Crisis, AMLO Says

(Bloomberg) -- Mexico President Andres Manuel Lopez Obrador estimated that remittances reached a record $51.6 billion last year, saying money sent from workers abroad is helping prevent a consumer crisis.

Transfers sent to Mexico rose 27% in 2021 from the previous 12 months, according to the government’s estimate -- although the central bank will report official data Feb. 1. 

Remittances surged over the past two years as the pandemic hit and workers in the U.S. received relief checks. In contrast, Mexico only marginally increased aid programs at home, and the country’s economy shrank 8.2% in 2020.

“This is a phenomenon, it’s historic!” AMLO, as the president is known, said at his daily press conference Thursday. “Thank you to our citizens abroad. They are helping a lot by sending support to their families. This -- along with our social programs -- has allowed us not to have a consumption crisis.”

Economists say money transfers to Mexico will remain robust, and BBVA projects it may even grow over the next few years thanks to the U.S.’s $1.2 trillion infrastructure plan. Bank of America forecasts remittances to end this year close to $52 billion, chief Mexico and Canada economist Carlos Capistran told Bloomberg News. 

“We estimate that one dollar in remittances generates about $1.7 in expenditure in Mexico, most of that consumption,” Capistran said. “Consumption has been very weak, but it would have been weaker without the remittances.”

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