MICROCAPITAL BRIEF: Contrary to COVID-19 Predictions, Mexico, Nepal Report Increases in Remittances

Contrary to many observers’ predictions regarding the economic effects of the COVID-19 pandemic, residents of Nepal and Mexico have received increasing amounts of remittances from workers living abroad. During July 2020, USD 3.5 billion in remittances was sent to Mexico, a 7-percent increase from one year earlier. This July 2020 figure is the third-highest level reported since 1975, the earliest year for which records are available. According to Alberto Ramos, an economist with US-based Goldman Sachs, possible reasons for the increase include, “generous wage/income support fiscal transfers in the US, a very competitive MXN/USD level, and a deep contraction of activity and employment in Mexico.”

Meanwhile Nepal Rastra Bank (NRB), the central bank of Nepal, reported remittances to Nepal totaled NPR 101 billion (USD 861 million) during July. This is a resurgence after a drop from NPR 79 billion (USD 675 million) in March to NPR 35 billion (USD 294 million) in April. Notably, this 1-month drop is much greater than the decrease in the annual remittance from NPR 879 billion (USD 7.48 billion) in 2019 to NPR 875 billion (USD 7.42 billion) in 2020.

To explain the high July 2020 figure, given the context of the COVID-19 downturn, Suman Pokharel, the CEO of Nepal-based International Money Express said, “Migrants may have sent what is remaining of their savings from their bank accounts…”.

Established in 1956, NRB formulates and monitors the nation’s monetary and fiscal policy and regulates the nation’s banking and financial sectors. As of 2019, NRB supervised 28 commercial banks, 29 development banks, 23 finance companies and 90 microfinance banks.

By Romil Pandey, Research Associate

Sources and Additional Resources

Reuters article
https://www.reuters.com/article/us-mexico-economy-remittances/remittances-to-mexico-hit-third-highest-level-on-record-in-july-idUSKBN25S5D1

Inter Press Service article
https://www.ipsnews.net/2020/08/defying-predictions-nepals-remittances-still-high/

NRB homepage
https://www.nrb.org.np/

NRB Annual Report 2018/2019
https://www.nrb.org.np/contents/uploads/2020/09/Annual-Report-2018.19.pdf

Past MicroCapital Brief on Remittances During the COVID-19 Pandemic
https://www.microcapital.org/microcapital-brief-bangladesh-bank-reports-record-2-6b-in-remittances-during-july/

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