MEXICO CITY — Instead of collapsing, remittances to Mexico were up year-over-year in five of the first six months of 2020. In June, payments to El Salvador, Guatemala, Nicaragua and Honduras also increased compared with the same period in 2019, after a dip earlier this year.
In March, the month the World Health Organization declared a pandemic, remittances to Mexico topped $4 billion — a record.
“It’s the exact opposite of what we were expecting,” said Jonathan Heath, deputy governor of Mexico’s central bank.
Economists, government officials and migration experts are trying to understand the phenomenon.
For years, the logic behind remittances — the payments that migrant workers send back home — was straightforward. As more people migrate and as economies in the developed world grow, remittances increase. During economic contractions, when immigrants are disproportionately vulnerable, remittances fall.
So when the World Bank predicted in April that the pandemic would cause their “sharpest decline in recent history,” it seemed reasonable.
But that logic is now being thrown into question in countries such as Mexico, where new data continued the surprising trend: Despite the global economic decline, Mexicans received $3.53 billion in remittances in June — an 11% jump year-over-year.
“We understand the economics of migration and how people make decisions in times of crisis a lot less than we thought we did,” said Andrew Selee, the president of the Migration Policy Institute.
Elsewhere, the data is uneven. Migrants sent $2.6 billion back to Bangladesh in July, a record for any month in the country. “Remittances continue to defy all expectations,” Bangladesh’s Daily Star newspaper reported. The payments have also surged in Pakistan.
But in other countries, such as the Philippines, Tajikistan and Brazil, remittances dropped by double digits.
That unevenness has made explaining the resilience of remittances in Mexico and Central America even more difficult. At Mexico’s central bank, Heath and his colleagues have wrestled with various theories. Initially, they thought migrants might be wiring their savings back home before returning to Mexico.
But as remittances remained high and, with little evidence of reverse migration, that appeared unlikely.
They debated another possibility: Mexican drug cartels were using remittances to launder money. But given the huge number of transactions and the relatively small sums, that also seemed improbable.
Another potential explanation is that many immigrants work in sectors — agriculture, construction, retail — that are considered essential, and have been able to stay on the job. But federal data shows unemployment among foreign-born Hispanics in the United States has outpaced that of the general population.
For now, Heath’s best guess is that many Mexican immigrants who lost their jobs in the United States have benefited from a federal unemployment package, allowing them to continue sending money even after losing their jobs.
Across the United States, migrants and the children of migrants say they have prioritized sending money to family in Mexico and Central America during the pandemic.
Since 2009, the average savings for Mexican migrants has increased from $4,000 to $6,000, giving them a slightly bigger cushion to continue sending remittances during an economic downturn, said Manuel Orozco, who studies the phenomenon at the Inter-American Dialogue.