- Immigrant Times
- Oct 20
- 8 min read
Updated: Oct 26
Remittances from US-based immigrants are vital for many families in smaller Latin American countries
For some countries, remittances are an economic afterthought; for others, such as small Central American states and several Caribbean nations, remittances represent a substantial share of GDP
By The Immigrant Times *
Andrés, who works as a bus driver in the US, supports his family in Honduras. Mariana, a Honduran, relies on her husband’s remittance from the US to make ends meet. (Photos: IOM 2023/Sonia Lagos)
October 2025: For millions of families across Latin America, remittances, money sent home by relatives working in the United States, are not an occasional gift: they are steady lifelines. In US dollar terms, Latin America and the Caribbean receive among the largest volumes of remittances worldwide, with Mexico alone receiving tens of billions each year. These flows are a mix of small monthly transfers that pay for food and rent, and larger, episodic sums used for school fees, housing repairs, or to start a business.
But as US immigration enforcement hardens, the pattern of who sends, how much they send, and what happens to that cash when it arrives has shifted in ways that are often subtle and uneven. Recent macro trends and new studies show enforcement can both depress remittance participation and, in some cases, increase amounts sent by those who continue to remit. The overall picture is one of resilience and fragility at once: remittances remain essential, but they are sensitive to politics, labour markets and policy shocks.
Remittances matter to recipient countries.
Remittances are a major financial channel connecting migrants in the US to households in Latin America. After a Covid-era surge, totals remained elevated: regional totals for Latin America and the Caribbean reached historically high levels in 2021–2023, with global authorities and regional banks reporting hundreds of billions to low- and middle-income countries and roughly $145–$160 billion flowing into the Latin America & Caribbean region depending on the year and methodology.
Mexico is the single biggest recipient in absolute dollars, receiving more than most Latin American countries combined in recent years, followed by Guatemala, Colombia, the Dominican Republic, El Salvador, and Honduras among the top recipients. In 2023–2024, Mexico set record annual remittance receipts (more than $60 billion in 2023/2024 as reported by the central bank and international agencies).
For some countries, remittances are an economic afterthought; for others, tiny Central American states and several Caribbean nations, remittances represent a substantial share of GDP (often double-digit percentages) and directly finance a significant share of household consumption and investment. That makes remittances both a stabiliser and a source of vulnerability: if flows contract, households face immediate hardship.
Principal beneficiary countries
Concise breakdown of the countries that receive the most remittances from migrants in the US and their typical economic significance.
Mexico: By far the largest recipient in dollar terms: central-bank and World Bank figures put Mexican receipts in the low-to-mid tens of billions annually (record flows in 2021–2023 peaked around $60–65 billion). In absolute volume, Mexico is the single largest Latin American beneficiary.
Guatemala: One of the largest recipients after Mexico in dollar terms and a high share of GDP for remittance-dependent households.
Colombia, Dominican Republic, El Salvador, Honduras, Peru: Each country receives multi-billion-dollar annual sums; for El Salvador and Honduras, remittances make up a much larger share of national GDP than in Mexico.
How remittances are used
Multiple household surveys and remittance reports (Inter-American Development Bank, World Bank, and national surveys) show a consistent picture of use:
Consumption and basic needs (largest share of remittances): A majority of recipients use remittances for day-to-day expenses: food, rent, utilities, and local transport. In many recipient households, remittances are the fiscal backbone that covers a household’s recurrent monthly bills.
Health and education: A substantial portion goes to school fees, supplies, and medical expenses, expenditures that recipients regard as investments in human capital, particularly where public services are limited or costly.
Savings and capital goods: Depending on the amount and frequency, households often split transfers between consumption and savings; large but irregular remittances may be saved for a business investment, used to buy or renovate property, or held as precautionary savings. The fraction used for housing purchases, home repairs, or business seed capital is meaningful but usually smaller than consumption.
Small business and community projects: In some places, migrants pool or channel funds into community cooperatives, remittance-backed microcredit, and small ventures. These activities are growing in prominence but are still a minority of total flows.
(Please note: Use varies by country, household income, and whether remittance receipts are regular (monthly) or one-off. Regular small transfers tend to be used for consumption; larger lump sums are likelier to be invested or saved.)
Effects of the US President Trump’s anti-immigrant rhetoric and enforcement
The US government’s hard line on immigration affects remittances, but the direction and magnitude depend on multiple mechanisms (income effects, fear and mobility constraints, deportations, and the legal composition of senders).
Studies and evidence point to:
Fewer remitters, but larger transfers among those who continue. Studies find that strict enforcement reduces the share of migrants who remit (fewer people are able or willing to send money) because of income loss, job disruptions, or fear. At the same time, migrants who continue to remit sometimes send larger amounts, possibly because they act as insurance for families, or because legal-status migrants increase transfers when undocumented workers are squeezed out. Catalina Amuedo-Dorantes* and colleagues found that enforcement reduces the fraction of migrants who remit, while altering amounts among the remainder.
Deportations change the saving / sending trade-off. Research using Mexican migration data shows that higher deportation rates are associated with rising remittance activity among undocumented migrants: rather than holding money in the US, where it might be seized or lost, migrants may channel more of their savings home. Documents published in 2023 indicate that rising deportations increase transnational economic engagement for undocumented migrants, shifting the balance between remitting and saving domestically. This changes the composition of flows (more transfers with possibly lower retained assets in the US).
Macro forces often dominate short-term trends. Aggregate remittance totals across the region reflect US labour-market health, exchange-rate movements, and global shocks (e.g., the Covid pandemic) as much as enforcement changes. The pandemic triggered a complex response: remittances fell in the very early months of 2020 in some places, then rose sharply in 2020–2022, a mixture of pent-up transfers, stayers sending more, and stimulus effects. Policy shifts and enforcement interact with these macro trends to produce the observed pattern.
Mexico: Monthly central-bank data from Mexico in 2025 showed a sharp monthly decline in remittance receipts in April 2025 (12.1% year-on-year), the steepest monthly drop since 2012; analysts linked part of the decline to a harder enforcement environment in the US, including raids and the revocation of prior protections that created fear and reduced remittance transactions. This illustrates how enforcement and political signals can produce quick short-term swings on top of longer-term trends.
Please note: Enforcement does alter remittance behaviour, but effects differ by legal status, household need, the nature of enforcement (raids vs. policy announcements vs. deportations), and broader economic context.
The 10 Latin American and Caribbean countries that benefit most from remittances sent by their respective diasporas
Mexico
Number of immigrants in the US: ~10.9 million (2023)
Remittance: ~US$67.6 billion (2024)
Remittance as of GDP: ~4.5%
Guatemala
Number of immigrants in the US: ~1.25 million (2023)
Remittance: ~$21.6 billion (2024)
Remittance as of GDP: ~19%
Colombia
Number of immigrants in the US: ~1.1 million (2023)
Remittance: ~$11.9 billion (2024)
Remittance as of GDP: ~2.8%
Dominican Republic
Number of immigrants in the US: ~1.3 million (2024)
Remittance: ~$11.2 billion (2024)
Remittance as of GDP: ~8.8%
Honduras
Number of immigrants in the US: ~0.9 million (2023)
Remittance: ~$9.5 billion (2024)
Remittance as of GDP: ~25.6%
El Salvador
Number of immigrants in the US: ~1.5 million (2023)
Remittance: ~$8.5 billion (2024)
Remittance as of GDP: ~23.9%
Nicaragua
Number of immigrants in the US: ~0.4 million (2023)
Remittance: not available (2024)
Remittance as of GDP: ~26.2%
Peru
Number of immigrants in the US: ~0.75 million (2023)
Remittance: ~$4.3 billion (2023)
Remittance as of GDP: ~1.6%
Brazil
Number of immigrants in the US: ~1.9 million (2022)
Remittance: ~$3.9 billion (2023)
Remittance as of GDP: ~0.2%
Ecuador
Number of immigrants in the US: ~0.8 million (2024)
Remittance: Not available (2023)
Remittance as of GDP: ~4.3%
Please note: % of GDP figures are approximate and for the most recent year available; values vary by data source. Sources: World Bank, Inter American Development Bankl (IDB), TheGlobalEconomy.com. Informal flows, such as cash, are not captured.
Generosity Index
We divided the annual remittance flows by the number of immigrants in the US to produce a rough ‘generosity index’. For example, the average Guatemalan immigrant in the US sends back roughly $16,600 a year, more than twice as much as the approximate $6,200 sent per Mexican immigrant. That gap reflects a combination of smaller diaspora size, higher dependency in the home country, and possibly stronger pressure to provide support.
Guatemala: ~$17,000, per immigrant, per annum
Colombia: ~$11,200 per immigrant, pa
Honduras: ~$10,200 per immigrant, pa
Dominican Republic: ~$8,900 per immigrant, pa
Mexico: ~$6,200 per immigrant, pa
El Salvador: ~$5,700 per annum, per immigrant, pa
Remittance tax
Starting January 2026, the US will apply a 1% excise tax on money transfers sent abroad using cash, money orders, or cashier’s checks. The tax is charged to the sender at the counter or service desk. No tax applies when the transfer is funded through a US bank account, debit card, or credit card, meaning senders can avoid the surcharge by using digital or app-based remittance platforms.
For a typical $500 cash transfer, the tax adds $5, a small sum that could still reduce what low-income families receive each month. Analysts expect many migrants to switch to digital payment methods to sidestep the charge, potentially accelerating the shift toward online remittances.
Fazit
Remittances can boost local demand and investment. In many towns, remittance-financed construction drives local employment (building materials, labour). When remittances target housing acquisition or repairs, they raise living standards and create collateral for small loans. However, most remittances are used for consumption, so their macro effect is to stabilise household income rather than to transform productive capacity. Programmes that couple remittances with matched savings or financial literacy training can increase the share invested productively, but these programmes remain limited in scale.
Remittance dependence also produces policy dilemmas: countries become exposed to external shocks (US recessions, policy changes), and local economies can become segmented around remittance-receiving households, generating inequality between households with and without diaspora ties.
* Sources:
• World Bank remittance data and press releases (regional totals, trends).
• Inter-American Development Bank (IDB): Remittances to Latin America and the Caribbean (2024 report
• International Organisation for Immigration (IOM)
• Catalina Amuedo-Dorantes, author of a 2023 study on deportations and remittances
• IDB analysts, including R Maldonado
• Migrant-support NGOs, remittance-industry groups (example: The Dialogue’s remittance reports)
• National central banks such as the Bank of Mexico, which publish monthly remittance stats.
Additional information and/or comments: Please email us for further information or use our comment form.
Further reading: Immigration in South America ||
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