Santo Domingo.- In 2022, the Dominican Republic received a significant $10.3 billion in remittances, ranking third among the primary recipients of these remittance flows in Latin America and the Caribbean. This ranking placed the Dominican Republic behind Guatemala, which received $18.1 billion (12.4% of the total), and Mexico, leading the region with $61.1 billion (41.9%), and second globally only to India.
The growth of remittances in the Latin American and Caribbean region has been substantial, with the region receiving a total of $146 billion in remittances in 2022. This increase has been attributed to the recovery of foreign employment in the United States, starting in January 2020, among other factors.
Remarkably, Latin America and the Caribbean have become one of the major destinations for remittances globally, trailing only South Asia among emerging markets. Over the past decade, the region has experienced the fastest growth in remittance flows, making them a crucial financial resource for many of its countries.
In the case of the Dominican Republic, these remittances amounted to $10.3 billion in 2022, representing 7% of the region’s total and contributing 9% to the country’s Gross Domestic Product (GDP).
However, the World Bank expresses concerns about the high percentage of GDP that remittances represent in recipient countries, particularly in Central America, where the median is 19.1%, and the Caribbean, with a median of 6.4%. This concern stems from the volatility of these flows and their impact on both receiving and sending countries, as seen during the COVID-19 pandemic.
In the Dominican Republic, remittances play a significant role, representing 40% of income in impoverished households and contributing 9% to national income as of September 2022, according to World Bank data.
While remittances have been a lifeline for many households in the region, their high share of GDP raises questions about the competitiveness of other sectors. In Mexico, the largest recipient of remittances, these transfers account for 4.3% of national income.
Despite the importance of remittances, the region has undergone macroeconomic reforms in recent decades to enhance resilience in the face of crises, such as inflationary pressures, geopolitical uncertainties, low commodity prices, and increased debt. Poverty and employment have generally returned to pre-crisis levels, and inflation, except for Argentina and Venezuela, has dropped to a regional average of 4.4%, lower than OECD countries, as reported in early October by the World Bank.