Overview of the Situation
Economists from BBVA Mexico have forecasted that remittances directed towards Mexican households will continue to flow in 2025, but at a lower proportion compared to the previous year. In 2024, these remittances reached approximately 64,750 million dollars, benefiting around 4.8 million recipient families in the country.
Projected Remittance Figures for 2025
According to BBVA’s predictions, the total remittances for 2025 will amount to roughly 61,000 million dollars. This represents a decrease of 5.8% compared to the remittances received in 2024.
Reasons for the Decrease
The economists attribute this moderation in remittance income to two primary factors:
- Reduced insertion of new Mexican migrants into the US labor market.
- The migration policies implemented by the US President, Donald Trump.
If their forecast proves accurate, this will mark the first annual decline in remittances to Mexico in thirteen years.
Impact of the Trump Administration’s Policies
BBVA economists explained that it is not deportations or detentions causing the decrease in migrants seeking work and consumption, but rather fear instilled by the Trump administration’s policies.
Effect of the Proposed Remittance Tax
In their annual report, developed in collaboration with the National Population Council (CONAPO), BBVA economists highlighted that the proposed remittance tax will have minimal impact on Mexico.
- 85% of Mexican migrants maintain bank accounts in the US.
- The 1% tax on cash remittances can be absorbed without significant issues by the remitters.
Key Questions and Answers
- What is causing the decrease in remittances? The primary reasons are fewer new Mexican migrants entering the US labor market and the impact of President Trump’s migration policies.
- How will the proposed remittance tax affect Mexico? The tax is expected to have a minimal impact on Mexico, as most migrants have bank accounts in the US, and the 1% tax on cash remittances can be absorbed by remitters.
