Remittances to Mexico declined by 12% in April compared to the same month last year, marking the steepest annual decline in over 10 years. This comes as US lawmakers consider imposing taxes on money transfers and amid increasingly harsh anti-migrant rhetoric from Donald Trump’s administration.
According to data released by Mexico’s central bank on Monday, the country received $4.76 billion in remittances in April, significantly below the $5.42 billion recorded in April 2024 and also below March’s figure of $5.14 billion.
Gabriela Siller, director of economic analysis at Grupo Financiero Base, noted that the annual drop is the steepest since September 2012. She attributed the decline primarily to a weakening US labour market and growing fears of deportation among immigrant workers, Bloomberg reports.
“This was due to the fact that migrants in the United States are afraid to go out to work and send remittances because they could be deported,” she stated.
Siller warned that a sustained drop in remittances could negatively affect consumption and economic growth in Mexico, which relies heavily on money sent from the US for household income.
Finance Minister Edgar Amador stated last month that Mexico received nearly $65 billion in remittances in 2024, amounting to roughly 3.5% of the country’s GDP. Central bank data shows that 97% of remittances in the first quarter originated from the United States.
Mexico’s economy narrowly skirted a recession in the first quarter of 2025, prompting the central bank to lower its growth forecast for the year to 0.1%, down from a previous estimate of 0.6%, according to its latest quarterly inflation report.
Meanwhile, US lawmakers are debating a proposed 3.5% tax on remittances sent abroad by non-citizens, a measure the administration of Mexican President Claudia Sheinbaum has denounced as a form of double taxation.
Shifts in the US labour market and wage trends for low-skilled workers represent major risks to future remittance flows, according to chief Latin America economist at Goldman Sachs Group, Alberto Ramos.
“The tightening of US immigration policies, and measures to reduce the flow of illicit drugs and money laundering may also impact the flow of remittances to Mexico,” he said.