In 2024, 73% of the remittances sent by Ecuadorian migrants to the country came from the United States.
The world continues to assimilate and adapt to the U.S. government's tariff policy, which has sparked a trade war.
The consequences for Ecuador go beyond the impact of the 10% tariff on exported goods, as well as the drop in international crude oil prices. A negative impact is also expected on the remittances sent by Ecuadorian migrants from the United States.
With the expected price increases in the United States and the risk of a possible global economic recession due to surcharges on imported goods, it is estimated that migrants living there will have less money to transfer to their families or contacts in their countries of origin.
The United States is the country from which the most remittances were sent to Ecuador in 2024, accounting for 73.5% of the total flow of money from migrants.
That year, Ecuador registered a record number of remittances received, reaching US$6.539 billion, equivalent to approximately 5% of the Gross Domestic Product (GDP).
This is the highest figure in 25 years of dollarization. The results exceeded by 20% the US$5.4475 billion recorded in 2023, according to the Central Bank of Ecuador (BCE).
Of the total remittances received in 2024, a total of US$4.804 billion came from the United States. Remittances from the United States grew 23.8% compared to 2023.
Given the global context shaped by Washington's agenda, "all Latin American countries are vulnerable, to a greater or lesser extent, to the global uncertainty stemming from the measures of the Donald Trump administration," warned Ernesto Revilla, chief economist for Latin America at Citi Research, in a report released on April 2.
In this sense, remittances are a determining factor, since "the more a country receives, the more vulnerable it is to any change that could affect dollar inflows," Citi noted, clarifying that a remittance shock had not yet been observed.
Juan Sebastián Naranjo, economist and actuary, indicated that according to international studies, a 0.5% contraction of the global economy is forecast. Inflation is projected for the United States at 3% to 4%.
"And at the Ecuadorian level, remittances, although it's too short a time to be certain, if they continue to trend in line with inflation in the United States, there will be a two-point contraction in remittances," he noted.
This means that by 2025, remittances arriving in Ecuador would decrease by around 2%, which would imply a drop of approximately US$130 million compared to 2024, according to Naranjo's estimates.
The money received from remittances helps Ecuadorian families cover their expenses, such as education, healthcare, food, and other expenses.
A reduction in household incomes covered by migrant contributions will translate into lower domestic consumption, which in turn will affect sales and the sustainability of businesses, which will be forced to make adjustments in a complex scenario.
“We see that this will have an impact. There will be immediate sensitivity, especially among the lower-middle class here in Ecuador. If the remittance directly affects the pockets of those receiving it here in Ecuador, their aggregate demand decreases. If there is a smaller decrease in aggregate demand, it means that companies will have less to sell. It generates a contraction in sales, a contraction in demand, and this would potentially generate a decline in Ecuador's economy,” the expert summarized.
In light of the Trump administration's varied decisions regarding surcharges, economist Juan Sebastián Naranjo warns that for the time being, there is no certainty regarding income stability in the United States; therefore, remittance levels will not be secure.
“The United States is engaged in a trade war with China, and nothing is certain. Plus, we have Trump, who today tells us A, but tomorrow he tells us B. He's an agent, a leader, who plays with perception. He plays a bit with how the counterweight China has will react. In the end, President Trump, when he was negotiating with China, is like a soccer player about to take a penalty. The player succeeds in scoring the goal when he sees which way the goalkeeper is diving. He announced the tariffs, saw if the goalkeeper had already dived, and how the country reacted. What President Trump did was score the goal, because he knew how the agents would react. Many aligned themselves, others responded. He knows who he can count on and who he can't. That's how geopolitics is,” the economist reflected.
In this sense, given that the flow of cash from migrant workers is known to be unstable, Naranjo believes the recommendation is for those who benefit from remittances to manage their money prudently and avoid long-term debt or purchasing non-essential goods.
