Although revenue figures Remittances to Colombia in the first seven months of 2022 register a slight increase compared to the same monthThere was already a net fall in the inflow of these payments to expatriate workers or workers in the country receiving payments outside the country in June and July.
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There are explanations for this behavior, such as the devaluation of the dollar, or, as seen from Colombia, the revaluation of the peso, and most important of all: A recession in the US economy.
According to Bank of the Republic data, remittances to the country totaled US$5,635 million between January and July, up 5.28% compared to the same period in 2022. $5,352 million.
On the other hand, in the seventh month of the year, earnings from these payments to workers totaled USD 761 million. This represents a 14.4% decline compared to the same month last year. According to the issuer’s filings, the figure was $889 million.
On the other hand, remittance income came in at US$783 million last June, down 4.62% compared to the sixth month of 2022, which came in at US$821 million.
It should be remembered that the country has remitted a total of 9,427 million USD in 2022.
The data indicates an increase of 9.7% compared to 2021, when this figure was 8,595 million US dollars, and compared to a decade ago, it indicates an increase of 137%, which indicates the dynamism of these resources, which are mostly labor income. Colombians.
(See: What caused US GDP growth in the second quarter).
The impact of these resources has been analyzed in various studies that have shown the social and economic impact they represent for different parts of the country.
And precisely, in the last decade, the income of these resources reached 66.650 million US dollars, Bank of the Republic records.
On average, every day in 2022, US$ 26 million in remittances from abroad will enter the country, a record for the eighth year in a row.
This number is repeated on all 213 days of the seven months of the year. Colombia ranks 4th in the regional ranking of remittance income.
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Performance in the region
Regionally, remittances to Latin America and the Caribbean reached US$142 billion in 2022, an increase of 11.6% compared to 2021. Exports to Mexico reached US$66 billion last year.
Based on the results of the first quarter, US$1,326 million from the US to Colombia, US$312 million from Spain, US$119 million from Chile, US$82 million from the United Kingdom and US$6 million from Venezuela. The latter has shown reactivity several years laterThese figures dwindled to barely US$100,000 per month.
Not only was the US the main source of remittances at the end of the first quarter, it also recorded the highest increase followed by the United Kingdom with a 60.7% increase.
For their part, remittances from Spain recorded a 3.4% drop and those from Chile fell 6.2%.
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According to José Ignacio López, head of economic research at Corficolombiana, the decline in remittance inflows was already seen coming, given the double-digit increase in these resources in the post-pandemic period. A significant increase in wages, not-so-deserving professions and a significant tax package.
The analyst recalled that the US government sent a significant number of unemployment benefit checks to large families, which created a positive effect on remittances to Colombia. But he warned that the US is seeing a slowdown, especially with a less dynamic labor market.
As interest rates have risen with high inflation, debate has raged over how far the labor market needs to cool in order to prevent wage hikes and inflationary shocks from spreading.
That’s why the figures for June and July show a labor market rebound after several monthsAs rates begin to suffer and the number of vacancies begins to decline, so does the number of resignations and layoffs.
(See: US Employment Falls 22.4% in July).
All these signs indicate that the labor market is cooling and that wages may soon stop growing.
This will also increase unemployment and affect remittances. Although the figures continue to be important, he expects a drop in the next 12 months.
For his part, certified financial analyst Andrés Moreno Jaramillo thinks there are several factors that account for the decline in remittances, but it is unclear which one weighs the most.
Those resources were at historic highs and the devaluation of the dollar made it attractive for many to bring dollars into the country due to the purchasing power of the resources.
Of course not He was embarrassed that remittances were not being brought into the country due to a rising dollar in Colombia or foreign economic and internal political uncertainty.
(See: Fed keeps interest rates high but may pause hikes).
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“I’m sure there are people who expect the dollar to go up, but other people equally, they have to bring them to live and support their families,” he said.
Remittances have become an important commodity as it competes with what is produced and invoiced abroad and income from oil or flowers.
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Summary
