For recipient families, remittances are a source of hope and security and have a significant impact on their quality of life according to the Inter-American Development Bank (IDB).

At the macroeconomic level, remittances are an important stabilizer of consumption and balance of payments and contribute to reducing poverty and inequality.

Likewise, at the level of the Northern Triangle countries, Mexico and the Dominican Republic, remittances amounted to more than US$100 billion in 2022, growing 12% compared to 2021 and 58% compared to 2019. In the Northern Triangle, remittances represented 22% of Gross Domestic Product (GDP) in 2022.

There are 4 characteristics that detail the importance of remittances in the region:

1-Remittances contribute to reducing poverty and inequality: they have significant effects on the income distribution of households, causing many of them to achieve a total income above the poverty line.

2-The families with the lowest incomes receive the most remittances: This important effect of remittances on poverty and inequality is mainly due to the distribution of remittances within households.

3-They are the main source of income for the poorest households: remittances to poor households constitute one of the largest sources of income, so their consumption capacity depends to a large extent on the continuity of the flows they receive. For example, for the poorest households in the northern triangle of Central America, remittances represent 90% of their income.

Translated by: A.M