Society

Total remittances of Mexican migrants living in the U.S. to Mexico were equivalent to about 3.8% of GDP in 2020

A growing number of Mexicans with U.S. work permits or access to benefits helped to fuel a more than 10% jump in money remittances to Mexico last year to more than $40 billion

Maria Elena Sandoval, 78, explains how she saved her foot from thrombosis thanks to private surgery paid for by the money from her son who works in the U.S., at her house in Jantetelco, state of Morelos, Mexico November 12, 2020. Photo: REUTERS/Carlos Jasso
  •  The pandemic shaved 8.5% off Mexican gross domestic product (GDP) in 2020, but remittances softened the blow;
  • Last year, total remittances to Mexico were equivalent to about 3.8% of GDP; over 95% come from the United States, official data show;
  • Much of the money captured in Mexico last year went into healthcare and housing.

Alberto Burgos is one of thousands of Mexican migrants living in the United States who dug deep and sent extra money to family back home last year to alleviate the devastating impact of the coronavirus pandemic. He transfered about a third more to his home town in central Mexico than he did in 2019, he said in an interview.

Burgos is one of a growing number of Mexicans with U.S. work permits or access to benefits who helped to fuel a more than 10% jump in remittances to Mexico last year to more than $40 billion, even as money transfers to other countries tumbled.

The record remittances have made Burgos’ home town of Jantetelco – which has sent many economic migrants to work in U.S. nurseries and elsewhere – an oasis of relative prosperity despite the worst recession to batter Mexico since the 1930s.

 The pandemic shaved 8.5% off Mexican gross domestic product (GDP) in 2020, but remittances softened the blow, helping Jantetelco residents to repair their homes and even cover private medical bills sparked by the strain on public hospitals.

READ ALSO: COVID-19 and insufficient policy response were the main reasons for Mexico’s second-deepest recession in 2020

Last year, total remittances to Mexico were equivalent to about 3.8% of GDP, according to calculations by economists including Jonathan Heath, a board member of Mexico’s central bank. Over 95% come from the United States, official data show.

The volume underlines Mexico’s reliance on the United States even as former President Donald Trump attempted to shut down migration with a border wall and threats of trade sanctions.

President Andres Manuel Lopez Obrador has hailed the migrants as “heroes” but Mexico’s dependence on their money shows the difficulty he has had in delivering on his pledge to create economic conditions that render migration unnecessary.

Mexican exceptionalism

Helping to fuel remittances is greater access to social security among Mexicans in the United States, 60% of whom have lived there for at least 20 years, according to data from Washington-based think tank the Migration Policy Institute.

Since the financial crisis of 2008-2009, the percentage of Mexican migrants with U.S. citizenship has risen significantly, said Jesus Cervantes, a remittance expert at the Centro de Estudios Monetarios Latinoamericanos (CEMLA) research institute.

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Over the past decade, the number of Mexican-born people registered in the United States has declined slightly. But the proportion of those holding U.S. citizenship rose by nearly a third to 37% of the total, according to the IPUMS USA database, based on an annual U.S. survey. That, Cervantes said, made remittances to Mexico “more resilient” than they have been to other countries.

Much of the money captured in Mexico last year went into healthcare and housing, experts say. In Jantetelco, some two hours’ drive southeast of Mexico City, 78-year-old Maria Elena Sandoval said she saved her foot from thrombosis thanks to private surgery paid for by money from a son living in the United States.

A municipality of about 18,000 inhabitants, Jantetelco took in about 25% more in remittances between January and September than in the same period in 2019, according to central bank data. In the third quarter, that equated to about $425 per person – or to almost two months’ worth of Mexico’s daily minimum wage.

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Mexico’s leaders have traditionally tended not to draw attention to the money, given the often murky U.S. migration status of many people supporting families in Mexico.

But Lopez Obrador has repeatedly celebrated their contributions, and welcomed U.S. President Joe Biden‘s bid to implement a reform that would settle the migration status of many Mexicans living in the United States.

“You’re vulnerable on remittances,” said Bank of America economist Carlos Capistran, “because it’s income the country doesn’t control.”

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