Remittances sent to Mexico declined 5.6% in the first half of 2025, hitting $29.576 billion, according to data released Friday by the Bank of Mexico. That represents a $1.75 billion shortfall compared to the same period in 2024, which had set a record for that six-month span. June alone delivered $5.201 billion—down 16.2% from June 2024 and 2.3% from May—continuing a recent downward trend in monthly inflows.
Falling Flows Amid Rising Anxiety and Enforcement Pressure
The pullback in remittances reflects both a drop in the number of transactions and a slight decline in the average amount sent. Between January and June, the number of remittance operations fell 4.4% year-over-year to about 79.1 million, with 99.1% executed electronically. The average transfer value slipped from $393 to $388 over the same period, a 1.3% decrease.
Analysts point to increased immigration enforcement in the United States and growing fear among undocumented or vulnerable Mexican migrants as key drivers. Earlier in 2025, April marked the steepest monthly year-over-year drop in remittances since 2012, with a 12.1% decline attributed to tougher enforcement actions, deportation anxieties, and a softer U.S. labor market. That retreat has lingered, contributing to the broader 5.6% contraction in the first half of the year.
Policy Turbulence from the United States Adds Pressure
Complicating the outlook, the U.S. has debated and moved forward with a new levy on certain remittances. Congress approved a 1% tax on remittances sent in cash—a measure Mexican officials have sharply criticized as potentially violating bilateral tax agreements. Electronic transfers, which compose the vast majority of remittance volume, are exempt from the tax.
In response, Mexican President Claudia Sheinbaum announced a program to reimburse Mexicans in the United States for the 1% cash remittance tax, delivering relief to the relatively small segment of senders who use cash. Sheinbaum emphasized that over 99% of remittances are already electronic, limiting the direct impact, and said the reimbursement would be handled through the government’s financial inclusion platform.
Long-Term Context: Record 2024, but Emerging Volatility
The current contraction comes after an 11-year streak of annual growth in remittances, with Mexico finishing 2024 with a record $64.745 billion inflow—a 2.3% increase over the prior year. That long run of gains began in 2014, and while last year’s total marked a new high, analysts have warned that the stability underpinning those flows is weakening.
A June 2025 BBVA Research note flagged emerging “dark spots” for remittances, noting heightened volatility since late 2023 and projecting a choppy 2025 with alternating months of declines and recoveries. The report suggested that the combination of U.S. policy uncertainty, enforcement dynamics, and broader economic signals in migrant-hosting states would produce an uneven pattern in remittance receipts.
Economic Stakes for Mexico Remain High
Remittances are a crucial external source of income for Mexico, accounting for roughly 4% of GDP and often serving as a lifeline for millions of families, particularly in rural and lower-income regions. The inflows have outpaced several traditional export streams in importance and have proven more resilient in past downturns, but the current contraction introduces risks to domestic consumption in areas heavily dependent on these transfers.
The contraction in remittances also reflects shifting migrant behavior. Fear of deportation and uncertainty about U.S. immigration enforcement have reportedly suppressed the willingness of some migrants to engage in visible financial activity, even as they remain employed or sending support quietly.
Looking Ahead: Uncertainty and Policy Responses
Mexican officials continue to press against the U.S. cash remittance tax, framing it as a breach of the 1994 bilateral treaty on double taxation and warning of diplomatic tension if it is enforced without accommodation. Meanwhile, the reimbursement program is intended as both mitigation and a political signal that Mexico will shield its diaspora from new costs imposed externally.
Economists are watching whether the combination of policy pushback, migrant sentiment, and the underlying economic health of U.S. labor markets will stabilize the remittance flow in the second half of 2025. BBVA’s outlook implies that while some months may see temporary rebounds, the full year will likely reflect the uneven trajectory already visible in the first half.
