Impact of COVID-19 on remittances and its countercyclical effects on regional economies in Mexico

Abstract

This article analyzes the impact of COVID-19 on México´s regional remittances in 2020. Relying on macro-regional simulations and the use of quadrants, the paper concludes that remittances will be again one of the few countercyclical mechanisms operating for the Mexican economy to face an economic crisis. Nevertheless, the counterbalanced effect of remittances will be regionally heterogeneous and, in some states, will not be enough to compensate the loss of employment and household income. The countercyclical effect of remittances will be stronger in the region of traditional migration.