Caribbean & Central America - March 2026

El Salvador, Guatemala, and Honduras received remittances worth a total US$47.73bn last year, a 20% increase compared to 2024, according to data compiled by the International Organization for Migration (IOM).

El Salvador received US$9.99bn in remittances, up from US$8.48bn in the same period in 2024, which is equivalent to a 17.8% increase, while Guatemala received US$25.53bn, up from US$21.51bn, and an increase of 18.7%. As for Honduras, in 2025 the country received US$12.21bn, a 25.3% rise compared to the US$9.74bn received in 2024. This is the latest stage in a sustained increase in the value of remittances to the three nations, which has risen steadily from US$15.65bn in 2016 to US$23.01bn in 2020 and now US$47.73bn in 2025.

These three nations have become highly reliant on remittances. The vast majority of remittances to northern Central America are sent from migrants in the US, meaning that the economy of the sub-region is highly exposed to economic and policy changes in that country. One example is the immigration crackdown imposed by US President Donald Trump after he returned to office in January 2025, which may have encouraged migrants to send more money than they might under normal circumstances due to concerns over being deported back to their home countries. If Trump succeeds in deporting large numbers of undocumented workers, as he has said he wants to do, then 2025 might represent a peak in terms of the value of remittances.

US authorities could also make it more difficult to send money home, for example by charging extra fees for payments sent abroad or imposing more onerous compliance procedures designed to gather data on undocumented people living in the country. The country already imposed a new 1% federal tax on remittances sent using cash, money orders, or cashier’s checks, effective from 1 January this year. Although this means that the vast majority of payments will avoid the levy, it would be easy for these rules to be updated to affect a far larger share of overall remittances.

Given the importance of remittances in supporting households in northern Central America, particularly those at the lower end of the income spectrum, Trump’s policies constitute a significant risk to national economies. For example, many households would likely fall into poverty if remittances are significantly reduced, and domestic consumption would be badly impacted too, with knock-on effects on economic activity and GDP growth. 

Although there is some evidence that Trump’s hardline immigration policies are encouraging migrants to move to alternative destinations such as the European Union, in particular Spain and Italy, the only real solution for national governments to insulate their economies from the policies of the White House is to attract investment and generate jobs at home. However, this is no easy task, as proven by the fact that so many people have left the region in search of opportunities in recent decades.

There is little to suggest that governments will succeed in turning this situation around anytime soon, leaving northern Central America vulnerable to factors that affect the value of remittances, including the aforementioned policy changes and a potential downturn in the US economy. As a result there are considerable risks that a major source of national income is reduced in the coming years, which would drive up poverty rates and increase the risk of social and political unrest, with tensions exacerbated by the fact that deported migrants will increasingly compete with those entering the workforce for a limited number of jobs. On the other hand, Trump may decide that restricting remittances is not worth the risk of setting off another wave of migration to the US southern border, or the 2028 US elections may result in a Democrat administration that is less hostile to immigration.