Remittance Risk: A potential recession in the US poses risks to the dependent economies such as Jamaica

 

 

The United States is the major source of personal remittances for many nations. A potential recession or significant growth reversal in the US poses risks to the dependent economies such as Jamaica.



The Bank of Jamaica states, “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.”

Despite talk of a pending recession, however, as of March 2025 analysts are still predicting significant growth in this segment for recipient countries.

Analyst source Datainsightsmarkets.com says that “The global remittance market is expected to reach USD 1,588.2 billion by 2033, growing at a CAGR of 6.6 per cent from 2025 to 2033.

“The increasing number of migrant workers, coupled with the growing adoption of digital remittance channels, is driving the market growth. Additionally, the rising demand for convenient and cost-effective remittance services is further fueling the market expansion. In 2025, the market size was valued at USD 914.6 billion.”


The remittance market, it is noted, is segmented based on application into personal remittances, business remittances, and public services. The personal remittances segment holds the largest market share due to the large number of migrant workers sending money back

For December 2024 net remittance inflows of US$277.0 million for in Jamaica and represented a decline of 6.0 per cent or US$ 17.6 million in comparison to December 2023.

T For calendar year 2024, remittance inflows to Jamaica amounted to US$3357.4 million. This outturn represented a decline of 0.4 per cent relative to calendar year 2023.

Jamaica’s decline of 0.4 per cent for the calendar year 2024 is compared to growth of 8.6 per cent, 2.3 per cent and 1.7 per cent recorded for Guatemala, Mexico and El Salvador, respectively.

The decline in December was primarily due to a decline of US$16.4 million or 5.2 per cent in total remittances inflows, further aided by an increase in remittance outflows of US$1.2 million or 6.1 per cent .

The decline in total remittance inflows was attributed to lower inflows through both Remittance Companies and the Other Remittances channel.

The largest source market of remittance flows to Jamaica for December 2024 continued to be the United States of America. Remittances from the USA accounted for 67.3 per cent of total flows, in line with the 67.5 per cent share recorded for December 2023.

Other source countries which contributed a notable share of remittances for the month were the United Kingdom (11.8 per cent ), followed by Canada and the Cayman Islands (8.7 per cent and 7.5 per cent, respectively).

The Bank of Jamaica indicates that in this island the main uses of remittances in Jamaica, according to BOJ research are: 1. Purchasing food items; 2. Education;3. Healthcare; 4. Financial investments; and other general expenses



Caribbean Money Daily.

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