After having increased 8% in 2020, remittances to Latin America and the Caribbean increased almost 30% in most of 2021, according to ECLAC data.

Virtually all of the main recipients in the region are increasing flows in this indicator at double-digit rates.

For ECLAC, the dynamism evidenced by remittances is linked to the economic recovery in the countries of origin.

It is also linked, in part, to the fact that migrants would have benefited from the employment stimulus and protection programs implemented in the sending economies (mainly in the United States and Spain).

In addition, part of the migrants are employed in jobs associated with essential services, which allowed them to maintain employment during the 2020 confinements.

For example, as of September 2021, unemployment among Mexican migrants in the United States was 4.1%, below average unemployment and the level of unemployment prior to the pandemic.

Remittances to Latin America and the Caribbean

With this, the surplus in the balance of transfers in Latin America will reach 2.5% of GDP (2.4% in 2020), due to a certain extent to this significant increase in remittances from migrants to the region, the main item in this account.

Imports

The services balance deficit will increase in 2021 to -1.2% of GDP (from -1.0% in 2020).

This is mainly due to a deterioration in the transport services account and other services whose imports (partly associated with imports of goods) increase in line with them.

In the case of transport services, the deterioration is also due to the high international freight payments linked to the recovery of world demand for goods and logistics bottlenecks.

For its part, the travel services account shows some recovery so far this year, influenced by the recovery of inbound tourism in some economies in the region as restrictions on international travel have been easing

The region’s income account deficit will increase from 3.0% of GDP in 2020 to 3.3% of GDP in 2021.

The marked increase in the prices of basic products increases the profits of companies linked to foreign investment, which implies an increase in the proportion of profits that they remit to their parent companies abroad.