Remittances dipped by J$10 billion in 2023

PERSONS BASED overseas sent US$3.13 billion i n remittances to Jamaicans in 2023, which equated to a 2.0 per cent fall, or the largest slide in at least a decade, according to Bank of Jamaica (BOJ) data.

The decline comes within the wider growth in the region.

“Jamaica’s decline of 2.0 per cent is in contrast to growth … recorded by Mexico, Guatemala and El Salvador,” stated the BOJ in its Remittance Bulletin.

What’s more, the decline seems to be gathering pace, with the final seven months of the year all registering declines. Additionally, the months of October, November and December all dipped greater than 4.0 per cent, or twice the overall annual decline.

Remittances, which are gifts in the form of cash, account for the largest pool of funds sent to the island and rivals the inflows from the tourism sector.

Jamaicans usually receive remittances from the United States (US), United Kingdom (UK), Canada, and the Cayman Islands. These flows are often used for consumptive purposes to augment the cost of living for many on the island.

The dip in 2023 equates to US$67 million, or J$10 billion, from the US$3.2 billion recorded in 2022. But it was also the second consecutive year of declines in remittances. In 2022, net remittances dipped 1.7 per cent from the record $3.26 billion in remittances in 2021.

The decline is at odds with the rise among certain regional peers. In December, the World Bank, in its remittance report called the Migration and Development Brief, estimated remittance flows to Latin America and the Caribbean to increase by 8.0 per cent to US$156 billion in 2023.

“The strong labour market in the United States positively impacted remittance flows,” the World Bank indicated. But that didn’t seem to benefit Jamaicans.

GraceKennedy Group, operator of the Western Union franchise, the largest in Jamaica, blamed “global economic challenges” as the cause for the reduction in its revenue from its money services unit. It, however, did not go into details on the matter. Up to press time, Wednesday Business awaited a response to queries sent.

Specifically, inflows from the US dipped from two-thirds of total remittances at 67.5 per cent in 2023, down from three-quarters, or 70 per cent, of all remittances a year earlier.

The UK share of remittances remained unchanged year-on-year at 11.5 per cent, while the share from Canada grew to 9.6 from 7.9 per cent, and Cayman Islands grew to 7.1 per cent from 6.9 per cent a year earlier.

GraceKennedy Group CEO Don Wehby thinks that inflation has impacted the Jamaican diaspora’s ability to send money home.

“They have come under pressure,” he told Wednesday Business yesterday morning.

Also, rising employment i n Jamaica has reduced the need for remittances.

“When an economy is doing well, and unemployment is down, relatives tend to send less remittances. Because there is a strong correlation between remittance and unemployment,” he said.

Wehby thinks that remittances grew in Latin America despite a dip in Jamaica due to higher levels of migration from Latin countries to the US.

“That might account for the difference,” he said.

In terms of outlook, January remittance numbers at GK are higher year on year, noted Wehby.