The US Flows of Money Transfers in 2026: Preliminary Projections – Inter-American Dialogue

Report on Remittance Flow Projections to Latin America and the Caribbean for 2026

Executive Summary

This report analyzes remittance flows to Latin America and the Caribbean (LAC), providing projections for 2026. The analysis indicates a significant slowdown in the growth of financial transfers, with an estimated increase of 0 to 4 percent, totaling approximately US$138 billion. This trend is primarily driven by a decline in new migrant senders and limited growth in the principal amounts remitted. These financial flows are a critical component of household income and national economies in the region, directly impacting the achievement of several Sustainable Development Goals (SDGs), particularly SDG 1 (No Poverty), SDG 8 (Decent Work and Economic Growth), and SDG 10 (Reduced Inequalities). The projected deceleration poses a considerable challenge to continued progress on these goals.

Remittance Dynamics and Sustainable Development Impact

Contribution to SDG 1 (No Poverty) and SDG 10 (Reduced Inequalities)

Remittances serve as a vital lifeline for millions of families, directly contributing to poverty alleviation and reducing income disparities. The stability and growth of these flows are essential for maintaining consumption, improving living standards, and investing in health and education in recipient communities. The analysis for 2026, which is based on US Census data calibrated with migration trends and remittance amounts, suggests that the contribution of new remittance senders will fall to under 1 percent, a sharp decrease from the 3 percent average observed between 2018 and 2024. This slowdown could undermine the poverty reduction gains facilitated by these private financial transfers.

Core Components of Remittance Growth

The volume of remittances is determined by two primary variables that account for 99 percent of its variation:

1. The change in the number of migrant senders: This is influenced by demographic shifts within the migrant community and the rate of new labor migration.
2. The change in the amount sent: This is affected by fluid economic dynamics such as wages in the host country, inflation, and economic conditions in the home country.

Analysis of Migrant Sender Population and SDG 8 (Decent Work and Economic Growth)

Demographic and Labor Migration Dynamics

The number of individuals sending remittances is shaped by interconnected demographic and labor factors, which are central to SDG 8’s focus on promoting sustained, inclusive, and sustainable economic growth and decent work for all.

• Demographic Dynamics: The pool of senders evolves as young migrants (aged 16-17) join the labor force and begin remitting, while others cease sending after a remittance cycle that can last up to 30 years. The proportion of young new senders varies by nationality, reflecting the age structure of different migrant populations.
• Labor Migration Dynamics: The influx of new migrants, whether through regular pathways (e.g., H1B, H2A/H2B visas) or irregular entry, is a key driver of remittance growth. This flow is closely correlated with labor market demand in the host country. Between 2018 and 2024, new arrivals averaged 4 percent of the total migrant population but are projected to fall sharply. This decline, coupled with deportations, results in a negative net variation in new senders for 2026, directly impacting the economic contributions migrants make to their home countries.

Economic Factors Influencing Remittance Amounts

Drivers of Principal Remitted

The average amount sent per transaction is a critical factor in overall remittance volume. This amount is influenced by several economic conditions relevant to both the host and home countries.

• Host Country Wages: There is a strong correlation between wages in the United States and the principal amount remitted by migrants over the past two decades.
• Home Country Needs: Increases in the cost of living in the LAC region often necessitate larger remittance transfers to support families.
• Risk Mitigation: In 2025, a notable increase in the principal remitted (over 20 percent in some countries) was observed. This is partly attributed to migrants’ risk-mitigation strategies, where they send as much money as possible amid fears of deportation.

In 2025, remittances to the LAC region (excluding Mexico) registered a significant 15 percent increase. However, growth in remittances to Mexico slowed due to a negative net replenishment of migrant senders, as its migration patterns are increasingly shaped by stable guest-worker programs rather than new inflows.

Projections for 2026 and Implications for SDG Achievement

A Declining Growth Trend

The outlook for 2026 points to a continued decline in migration and a potential increase in deportations. Assuming migrant numbers and remittance volumes remain steady beyond inflation-adjusted levels, overall growth is projected to be modest, likely under 1 percent. This forecast presents significant challenges to the sustainable development trajectory of the LAC region.

Conclusion

The projected slowdown in remittance growth for 2026 threatens to weaken a key financial resource that supports progress toward multiple SDGs. A decline in new migrant senders, driven by restrictive entry policies and changing migration patterns, is the primary cause. This trend underscores the vulnerability of remittance-dependent economies and highlights the need for policies that support safe, orderly, and regular migration (SDG Target 10.7) to ensure these financial flows can continue to contribute effectively to global sustainable development.

Analysis of SDGs, Targets, and Indicators

1. Which SDGs are addressed or connected to the issues highlighted in the article?

1. SDG 10: Reduced Inequalities
   • The article’s primary focus is on international migration and the flow of remittances from the United States to Latin America and the Caribbean. This directly relates to the economic relationship between countries and the financial inclusion of migrants and their families, which are key aspects of reducing global inequalities.
2. SDG 8: Decent Work and Economic Growth
   • The article explicitly links remittance flows to labor dynamics. It discusses “labor migration,” “guest worker programs (H2A and H2B visas),” “wages in the U.S.,” and how the “US unemployment” rate influences migration patterns. This connection highlights the role of migrant labor in the host country’s economy and as a source of income for families in their home countries.
3. SDG 1: No Poverty
   • Although not the main focus, the article’s subject matter—remittances—is intrinsically linked to poverty reduction. Remittances are a crucial source of household income in many developing countries. The article mentions that migrants send money so their “families can cushion those funds,” implying that these financial flows serve as a safety net, helping to alleviate poverty and economic hardship.

2. What specific targets under those SDGs can be identified based on the article’s content?

1. Target 10.7: Facilitate orderly, safe, regular and responsible migration and mobility of people, including through the implementation of planned and well-managed migration policies.
   • The article extensively analyzes different migration patterns, distinguishing between “regular pathway” migration (such as H1B, H2A/H2B visas) and “irregular migrant entry.” It also discusses factors that affect migration flows, such as “migrant entry restrictions” and “deportations,” which are direct outcomes of migration policies.
2. Target 10.c: By 2030, reduce to less than 3 per cent the transaction costs of migrant remittances and eliminate remittance corridors with costs higher than 5 per cent.
   • The entire article is dedicated to analyzing the volume and growth of remittances (“The flow of money to Latin America and the Caribbean”). While it does not discuss the transaction costs, its detailed analysis of remittance volumes (e.g., “US$138 billion,” “average remittance ticket”) is fundamental to the context of this target, which aims to maximize the financial benefit of these flows for recipient families.
3. Target 8.8: Protect labour rights and promote safe and secure working environments for all workers, including migrant workers…
   • The article’s discussion of “labor migration dynamics” and specific “guest worker programs” directly pertains to the economic conditions of migrant workers. The analysis of how wages and unemployment in the host country (U.S.) affect migrants’ ability to send money is connected to their economic security and working environment.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

1. For Target 10.c (Remittances):
   • Total volume of remittances: The article provides specific figures and projections, such as “an estimated US$138 billion” in outbound US remittances for 2026. This is a primary indicator of the scale of financial flows.
   • Average principal amount remitted: The text analyzes the “average remittance ticket” and how changes in this amount contribute to overall growth, noting it “increased by more than 20 percent in several countries.”
2. For Target 10.7 (Migration):
   • Number of migrants by entry type: The article differentiates between migrants entering through regular pathways (“guest worker programs under the H2A and H2B visas”) and those entering through “irregular migrant entry.”
   • Number of new remittance senders: This is used as a key variable, with the article noting that “new remittance senders accounted for 3 percent of all senders” between 2018 and 2024.
   • Number of deportations: The analysis includes “Migrants deported” as a variable that affects the net number of remittance senders.
3. For Target 8.8 (Migrant Workers):
   • Unemployment rate in the host country: The article explicitly states that “declining unemployment correlates with increasing regular and irregular migrant entry,” using it as an indicator of labor demand for migrants.
   • Wages in the host country: The text and a corresponding chart show the relationship between the “Principal Remitted and Wages in the U.S.,” identifying wages as a key factor shaping the amount migrants can send.

Summary Table of Findings

Source: thedialogue.org