Critical remittance flows expected to increase at year end

While remittances to Jamaica frequently underperform some regional neighbors, the island remains the English-speaking Caribbean nation with the highest remittance flows according to the central bank.

The end of the year is often high season for inflows. However, December, the month in which it is believed cash is often sent as a holiday gift, is not always the month of highest totals, as remittances have peaked at other periods over the last three years.

For January to August 2024, remittance inflows to Jamaica amounted to US$2,239.3 million. This outturn represented a decline of 0.1 per cent relative to January to August 2023. 

How does the island stack up in relation to other Latin American neighbors? Jamaica’s decline of 0.1 per cent for the calendar to August 2024 was similar to a reduction of 10.9 per cent for Mexico. In contrast, there was growth of 7.9 per cent, and 0.1 per cent recorded by Guatemala and El Salvador, respectively.

The Bank of Jamaica explains that Jamaica's underperformance relative to Mexico, Guatemala, and El Salvador can be attributed to several factors, including the size and distribution of migrant populations and the influence of migrant transit flows in Latin America.

In 2024, substantial increases in remittances to Mexico and Guatemala, for example, have been attributed to a surge in migrants transiting through these countries to the U.S.

In contrast, Jamaica, with its smaller migrant population and different migration dynamics, does not experience these same influences, leading to comparatively lower growth in remittance flows.

Jamaica is the largest recipient of remittances in the English-speaking Caribbean but ranks third overall in the Caribbean, with larger remittance inflows going to the Dominican Republic and Haiti.

In 2024, inflows from the United Kingdom has been increasing, although the United States remains the largest source nation. Commenting on the months in which this occurred, the BOJ noted “The Pound Sterling strengthened against the USD in 2024, coinciding with an increase in the number of remittance transfers received from the UK."

Outlining the contribution of the segment, the BOJ stated, "Remittances are the second largest source of foreign currency inflow, supporting the country's import needs. Remittances are also a vital source of income for many Jamaican households, often used to cover essential expenses such as food, housing, education, and healthcare. 

"A substantial decrease in these funds would likely lead to reduced household consumption, which could, in turn, slow overall economic activity. The net impact may also have implications for the country’s reserves," the central bank stated.

According to a 2019 pulse survey conducted by BOJ, remittances are primarily used for essential expenses such as:

1. Purchasing food items

2. Education

3. Healthcare

4. Financial investments

5. Other general expenses



Data provided by the Bank of Jamaica (BOJ) for the period 2020 to 2022 shows that while the number of monthly money transfer transactions are declining, the average size of transfers by those sending remittances to Jamaica is on the increase.

The bank indicates here were between 800,000 and one million money transfers to the island each month according to data for the last three years. The data did not segregate how many of these transfers were sent by the same individual.

In 2021 when US$3.45 billion in funds were sent to the island, the number of transactions also hit a historic high of over 12 million or precisely 12,107,625.00 —which was over one million transactions per month.

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