Remittance money is poised to boost several Central American nations economies again in the coming year.
The annual survey by the Economic Commission for Latin America and the Caribbean says the flow of cash combined with strong exports will have a major impact on consumption trends across the region.
In the early months of 2017, remittances rose by 8 percent over the same period in 2016, partly owing to stronger economic activity in some of the originating countries.
In Paraguay, money sent home from abroad was up 32 percent year-on-year, in the period from January to March.
Although Spain remains the chief source of remittances, in the first quarter of the year, cash from Argentina tripled its 2016 figure, displacing the United States as the second largest for Paraguayans
Central American economies are projected to grow by 3.6 percent on average in 2017.
Panama and the Dominican Republic will be the subregion’s two fastest-growing, with rates of 5.6 percent and 5.3 percent, respectively.
Mexico is expected to post growth of 2.2 percent, just one tenth of a percentage point below its 2016 rate.
On the one hand, in 2017 the nation is receiving the same positive impulses as the Central American region: higher remittances and stronger growth in external aggregate demand.
While on the other hand, the initial uncertainty regarding the potentially negative effects of United States policies towards Mexico has eased and the country’s growth outlook has accordingly improved, at least in the short term.
In terms of expenditure, for the Central American subregion and Mexico together total investment will remain slack this year, with just 0.7 percent growth.
Private consumption will continue to contribute strongly to growth with a projected rise of 3.6 percent in 2017, driven by low rates of inflation and year-on-year growth in remittances.
The Economic Survey of Latin America and the Caribbean is one of ECLAC’s most important annual reports.
Published since 1948, it analyzes Latin America and the Caribbean’s economic performance during the year’s first semester and delivers the perspectives for the following months.