The households that receive money orders from relatives who work abroad received almost five billion pesos more than what would have come to them if the peso had not weakened as it did in 2022.
According to the Bank of the Republic, remittances broke their record for the eighth consecutive year, and 9,429 million dollars arrived in the country for this concept, an increase in dollars of 9.7 percent.
(Also read: Dollar in Colombia: what is the reason for its downward trend?)
But the harsh devaluation of the peso last year —which was concentrated in the second semester with 18 new dollar records— meant that the money received in wire transfers could be exchanged for 24.9 percent more pesos than what was received in 2021.
With dollar prices, month by month, 2021 remittances can be exchanged for 32.3 trillion pesoswhile in 2022 it can be exchanged for 40.3 trillion pesos.
If the peso had not depreciated, the increase would have been 3.1 and not 8 trillion pesos. In other words, families took 5 trillion pesos more thanks to the devaluation.
Nevertheless, part of what was gained by the devaluation was eaten by inflation. If you look at the price indices that Dane calculates month by month, of the 24.9 percent that increased the value in pesos of remittances, the shortage erased 11.8 points of purchasing power.
It is to be expected that unemployment will not continue to decrease or eventually rise, which would end up influencing a lower inflow of remittances to our country.
Even so, the families that received the drafts had a purchasing power of 13.1 percent more than part of this income.
According to the report on remittances from the Banco de la República, on average, each day of last year about 26 million arrived for this concept.
During 2021 8,597 million dollars arrived and, compared to a decade ago, this meant an increase of 137 percent, which reflects the dynamism of these resources, which are mostly Colombian labor income.
In the last decade, the income from these resources reached 66.650 million dollars, according to the records of the central bank.
In October, the month in which a strong devaluation of the peso against the dollarSince this reached close to 5,000, the largest income of remittances was lost, with 894 million dollars, that is to say that in that period alone those resources may have represented close to 4.5 trillion pesos.
In contrast, February was when fewer remittances entered, and the record was 647 million dollars. In December, Colombians abroad sent 849 million, which was the third highest record in 2022.
(Also read: Dollar: why is its value falling in Colombia and the world?)
As in all economic phenomena there are cycles, some considering that the good run that these resources have registered could, although they do not fall, moderate their growth.
This, based on the latest announcements of a possible slowdown in countries like the United States, where more than 50 percent of these incomes come from. Diego Rodríguez, manager of Bosk Capital, affirms that in theory remittances could slow down, but in practice he believes that “The boom in remittances to Colombia will continue. We will continue to grow on that front.”
Consider that despite a possible slowdown, employment in the US and Europe remains strong. Especially related to services.
Another factor that he mentions is that the price of the dollar makes temporary jobs very attractive. “The minimum wage in the United States is around 4,000 a month. With this, a person goes and works in a trade for 3 to 6 months and generates a much higher income, ”she says.
In addition, he said that “the immigration part for temporary jobs is open and it is an option, without counting the option that some take to do it without documentation. This flow of resources is inflationary, the high dollar boosts it and it is difficult to control via interest rates”.
For his part, Juan David Ballén, head of Economic Research at the firm Casa de Bolsa, assures that developed economies, based on USA and passing through Europe, which is where the largest amount of remittances comes from, they will present lower economic growth than in 2022.
Thus, «it is to be expected that unemployment does not continue to decrease or eventually rise, which would end up influencing a lower inflow of remittances to the country,» says Ballén.
For his part, Sergio Olarte, chief economist at Scotiabank Colpatria, believes that «in any case, there is room for workers’ remittances continue to reach the Colombian economybecause that part of unskilled work that continues to be demanded in an important way in that country is the one that sends the most resources to Colombia”.
