Around six million households in Latin America and the Caribbean will not receive remittances this year due to the global economic crisis triggered by the COVID-19 pandemic.
The consequences will be just as great in El Salvador, Honduras, and Guatemala, where there are thousands of households heavily dependent on the money sent by their family members working abroad.
Millions of Central Americans working in the United States send a portion of their income to families back home. With the COVID-19 pandemic shuttering many businesses in the US, they are less likely to escape the financial damage.
“Migrant workers… tend to be more vulnerable to loss of employment and wages during an economic crisis in a host country,” says the World Bank.
Considering the report, remittances are set to drop by 20%, compared to the last year. The LAC region receives approximately US$100 billion in remittances annually. This year it would only receive around US$75 billion.
Adding salt to the wound is the rising cost of transferring remittances. “Amid the COVID-19 crisis, the costs of transferring remittances to the region could increase due to operational challenges being faced by remittance service providers,” says the bank.
The average cost of sending $200 to the region was 5.97 percent in the first quarter of 2020.
Another major loser is Mexico, whose 7 million households received a total of US$30 billion in remittances last year. Nearly 30% of these households are less likely to get remittance this year, says the IPS, citing the market experts.