Remittances support millions in Central America and represent up to 26 % of GDP in some countries. Experts rule out an economic collapse for mass deportations from the US, but warn about the slowdown in growth and social impact on the poorest households.
For thousands of Central American families, remittances are not only an extra income, but the basis of their daily livelihood. In many homes, with this money they put food on the table, pay the roof where they live, cover education and health.
However, recent Mass deportation policies In the United States they have generated uncertainty about the future of these shipments, and many wonder: what will happen to homes that depend on this money? Are economies from countries such as Guatemala, El Salvador and Honduras destabilize?
In 2024, Guatemala received more than 21.5 billion dollars in remittances, a figure equivalent to 20 % of its Gross Domestic Product (GDP). In El Salvador and Honduras, the dependence is even greater, with figures that are around 24 % and 26 % of GDP, respectively. In simple terms, more than a fifth of the economy of these countries depends on the money sent by migrants abroad.
In addition, for the poorest households in Central America, Remittances represent up to 90 % of their income. That is, without this money, millions of people would see their possibilities of access to basic goods like food and health reduced.
Despite the importance of remittances in macroeconomy, economists consulted by Voice of America They consider that mass deportations would not cause an immediate economic crisis. Rather, the impact would be social.
“If 36,000 people are deported a year and each one sent on average $ 190 per month, the impact would be 83 million dollars annually. Although it is a considerable figure, it remains minimal within an economy such as Salvadoran, which in 2024 closed with A GDP of 37,000 million, “he explained to the VoaSalvadoran economist Rafael Lemus.
In El Salvador, the number of deportees has oscillated between 9,000 and 11,000 every year. In 2024 it increased to 14,000.
Despite this, Lemus argues that, instead of an economic collapse, the closest scenario is a slowdown in remittance growth.
“The same can happen in Honduras and Nicaragua, which have similar economies. In Guatemala, the impact may even be lower because the economy is bigger, ”he added.
Guatemala's GDP exceeded 105,000 million dollars in 2024.
From Guatemala, economist Hugo Maul emphasizes that there are operational difficulties to deport millions of migrants at once.
“The United States has a system based on due process, which makes deportations become a prolonged process and not an immediate and massive expulsion,” he told the Voa.
Maul coincides with Lemus that deportations would not have a significant impact on the macroeconomy of Central America; Rather, the growth of remittances is expected to slow down.
In addition, the real challenge, he explained, will be the poverty in which the homes that depend on them will be plunged. As well as the reinstatement of deported migrants in local labor markets.
“If it were the case of a massive return, then the remittances will be dramatically contract, although it is difficult to talk about a specific impact because a massive deportation is not the same at one time that the accumulation of four years of deportations,” he added .
A more than economic social problem
Remittances are much more than a transfer of money from one country to another. For the poorest households of the northern triangle of Central America, remittances represent 90 % of their income, according to a Research from the Inter -American Development Bank (IDB).
For the Guatemalan Exsul Fernando Castro, a significant fall in remittances “will hit the quality of life of households that depend on them, and poverty can increase,” he warned of VOA.
According to the IDB, in countries such as El Salvador, remittances manage to reduce the poverty rate by almost six percentage points and the Gini coefficient, which measures inequality, in about three points.
For Castro, poverty levels in Central America will behave depending on how US migratory policies and the capacity of the countries in the region evolve to generate employment and opportunities for deportees.
Meanwhile, thousands of families continue to depend on each dollar that arrives from abroad, with the uncertainty of not knowing how long they can count on it.