Central America slows remittance growth to 7.3% in 2026, according to a report

A stylized Central American woman's hand holds a dollar bill, which inside shows an American city with rain and a migrant, surrounded by food, medicine, and school supplies, symbolizing the impact of remittances. (Illustrative image Infobae) In El Salvador, seven out of ten households depend on the money their migrants send, and that flow is beginning to show signs of exhaustion. This is the warning of a report prepared by Manuel Orozco for the Inter-American Dialogue, an organization specializing in hemispheric policy, dated September 2026, which places Central America as the subregion most exposed to the slowdown of remittances in Latin America and the Caribbean. The document projects that the region will receive USD 188,925 million in 2026, an increase of 4.7% over the previous year. The figure sounds positive, but it hides a slowdown: in 2025 growth had been 6.5%. The Central American subregion had grown 19.3% in 2025. For 2026, the report projects only 7.3%, the steepest relative decline in the entire study. The Inter-American Dialogue does not anticipate an immediate collapse in the amounts, but rather the end of an extraordinary surge. That surge, according to the report, was linked to migrants' fear of being deported, a phenomenon that is now beginning to fade. Why are remittances slowing in Central America if they are still growing in dollars? Because the number of transactions is falling and the average amount is no longer increasing at the 2025 pace: there are fewer active senders, more deportations, and stagnant wages in the sectors where much of the Central American diaspora works. A Salvadoran woman receives US dollar bills from a teller at a bank branch, highlighting the importance of remittances with the flags of the United States and El Salvador in the background. (Illustrative image Infobae) The report attributes much of the slowdown to the drop in the number of transactions. Comparing July 2026 with July 2025, remittances to nine countries in the region fell between 1.1% and 2%, according to the measurement used. Transactions went from 33.4 million in July 2024 to 30.9 million in July 2026, levels similar to those of 2023. Two factors explain the decline: the lower arrival of new migrants and the increase in deportations from the United States. The report estimates more than 400,000 deportations of Latin American and Caribbean migrants through August 2026, with a projection of 414,298 for the entire year. A report by the Inter-American Dialogue projects that remittances to Latin America will reach 188,925 million dollars in 2026 with a moderation in growth. (Illustrative image Infobae) Guatemala would account for 73,324 deportations and Honduras 51,150, in addition to 17,050 in the case of El Salvador and 9,300 in Nicaragua. The most revealing data point, according to the study, is that more than 90% of those deported in January 2025 had been living in the United States for more than four years: they were not recent arrivals, but people with jobs and economic networks already built with their families. In 2025, migrants sent more than 20% additional in principal amounts, a behavior the report links to fear of deportation: many decided to send more while they still had jobs or savings available. By July 2026, that growth had slowed to about 5%. The phenomenon hits Central American senders hardest, many of whom are employed in construction, hospitality, and services, sectors where wages did not increase substantially. The document raises a paradox: the threat of deportation temporarily increased remittances, but in the medium term it ends up weakening migrant families' ability to sustain them. Data from the Central Reserve Bank reveal surprising changes in the flow of remittances. Variations in the number of people, million-dollar figures, and a social impact that redefines the Salvadoran family economy The weight of remittances in Gross Domestic Product (GDP) explains why the slowdown is more worrying in some countries than in others. In Honduras they equal 34% of GDP, in Nicaragua 33%, and in El Salvador 28%; in Guatemala the percentage drops to 22%, although the absolute volume is high. The report maintains that, according to quarterly data between 2013 and the first quarter of 2026, every 5.5% increase in remittances raises GDP by about 1%. If that relationship holds, the slowdown can translate into consumption, housing, private education, and health for thousands of households. The weight of remittances in gross domestic product (GDP) explains why the slowdown is more worrying in some countries than in others. In Honduras they equal 34% of GDP, in Nicaragua 33%, and in El Salvador 28%; in Guatemala the percentage drops to 22%. For 2027, the report anticipates almost zero growth in El Salvador, only 3% in Honduras, 2% in Nicaragua, and 2.5% in Guatemala. It also projects a reduction in the number of senders: 9.4% fewer in Guatemala, 6.3% fewer in Honduras, and 4.7% fewer in Nicaragua, with similar declines among receiving households. Unlike its Central American neighbors, the Dominican Republic figures among the countries with solid growth: the report's annex projects a 6% increase in remittances for 2026, in line with the Caribbean's overall performance, whose subregion would go from growing 10% in 2025 to 6.5% this year. The study does not detail specific causes for the Dominican case, although it places it within a Caribbean pattern more stable than the Central American one, without the same exposure to the mass deportations affecting Mexico and the countries of northern Central America. A structural change is sweeping the entire region: more than 61% of remittances would originate through digital channels in 2026, compared to just 8% in 2015. The jump would be due to greater banking of migrants, competition among fintech platforms, and a 1% tax on cash transfers, which would have pushed many senders toward digital means. The digital remittance market to the region would reach USD 99,500 million in 2026. Remitly leads that segment with a 61% share, while PayPal/Xoom would drop to 11%, according to the report's figures. The Dominican Republic figures among the countries with solid growth: the report's annex projects a 6% increase in remittances for 2026, in line with the Caribbean's overall performance, whose subregion would go from growing 10% in 2025 to 6.5% this year. The document does not limit itself to describing the slowdown: it proposes measures to cushion it. Among them, the creation of financial products for migrants and their families, such as Treasury bonds, pension funds, and savings accounts in the country of origin. It also suggests expanding money transfer companies' services to stored-value cards and digital accounts, in addition to promoting more temporary work visas as a mechanism to sustain legal flows of senders. Orozco insists that remittances should not be limited to immediate consumption, but should become tools for savings and financial inclusion for the households that depend on them.