Remittances Hit Record High of $18.95 Billion for Northern Triangle

Remittances to El Salvador, Guatemala, and Honduras —known collectively as the Northern Triangle— soared to a record US$18.95 billion in the first half of 2024, marking a 4.2% increase over the previous year.

Remittances are money sent by migrants to their home countries, and they are a lifeline for millions of families in the Northern Triangle and the rest of Latin America. The largest volume of remittances flowing to the region come from migrant workers in the US.

Guatemala received the largest share of remittances during the first half of 2024, at US$10.27 billion, followed by Honduras (US$4.63 billion) and El Salvador (US$4.05 billion).

Analysts and policy makers see remittances as an opportunity to boost local economies across the region, hoping they will help curb migration to the US. Several studies point to remittances being an important factor in the reduction of poverty.

The US$765.4 million increase in remittances underscores the resilience of these financial flows, even in the face of global economic challenges, according to the International Organization for Migration (IOM).

A good problem to have is still a problem

While remittances provide an economic lifeline to families in Central America, economists and political analysts have warned of a growing dependance in this foreign flows of money.

The economic well-being of families in the Northern Triangle is closely tied to US economic conditions and immigration policies.

A considerable increase in US unemployment, for example, could cut down on the flow of dollars to Central American families. Also, a highly restrictive immigration policy might affect the volume of remittances too.

As the region grapples with ongoing economic instability, violence and political uncertainty, the reliance on remittances raises concerns about the long-term sustainability of economies built around these external financial flows.

Some Latin American leaders have celebrated the high flow of remittances to their respective countries, applauding the work done by fellow nationals in the US. However, they have also recognized (sometimes unintentionally) that their economies relly too much on remittances. Mexico’s President López Obrador, for example, declared several years ago that remittances shielded the country from a crisis in consumer spend.

The US government is advocating for economic reforms in the Northern Triangle to reduce dependence on remittances. Experts agree that internal reforms aimed at fostering domestic economic growth are essential.

By focusing on development and creating new opportunities within the region, policymakers can help alleviate poverty and reduce the pressure to migrate.