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Haiti and Central American countries will be the most affected in 2026 by a decline in migration and remittances, accompanied by an increase in deportations, which will affect economic growth and increase unemployment and informality.
First, the flow of money to Latin America and the Caribbean in 2026 will increase slightly, to less than 2 percent, due to (a) the decrease in transactions resulting from migration drops and the increase in deportations, and (b) the limited increase in remitted amounts. In the case of remittances from the United States in 2026 (which represent 85 percent of the flows to the region), growth could range between 0 percent and 4 percent, totaling an estimated US$141 billion, the same as in 2025.
In Central America, remittances will grow by 0 percent-2 percent, resulting in a 1.5 percent decrease in private consumption and a 1 percent decrease in GDP growth. A 3.5 percent increase in remittances raises GDP by 1 percent, which in turn affects productivity, investment, and employment.
Second, the decrease in migration and the increase in deportations will push the labor supply above 5 percent of the workforce in those countries, accentuating the trend toward the informal economy and unemployment. Annual emigration from Central America between 2018 and 2023 has been similar to or greater than the annual increase in the labor force, at 500,000 people. Meanwhile, deportations in 2026 will be equal to or exceed those in 2025 (100,000).
Unlike previous years, those returning are migrants who had lived in the United States for an average of 5 years, working in markets differentiated by labor demand in key sectors of the U.S. economy, such as domestic work, construction, and hospitality services—sectors that constitute saturated labor markets in the Central American region.
Accompanying this trend, there is a lack of effective risk mitigation policies. With declining remittance income and an increased labor supply, the intention to migrate is likely to rise by the end of 2026. This situation could trigger a new wave of migration or social unrest amid underperforming economies and increasing political risks across countries. These pressures will be greater in areas outside capital cities and in rural areas.
Historical data show that the intention to migrate rises to over 15 percent of households during difficult situations (such as recessions, crime, natural disasters, or political instability). In both El Salvador and Honduras, in 2019, political risk factors increased the intention to migrate to over 25 percent of households, intensifying a wave of migration months after borders reopened following the COVID-19 quarantine. In Nicaragua, the intention to migrate doubled from 14 percent in 2019 to over 33 percent in 2021, when Daniel Ortega and Rosario Murillo changed their plan to remain in power and criminalized democracy.
What helped Central America in 2025?
In each country, migration conditions are precarious, and the increase in deportations and the eventual return of some Nicaraguans due to the expiration of humanitarian parole, as well as of Hondurans and Nicaraguans under Temporary Protected Status (TPS), will coincide with a decrease in remittance growth. In turn, in 2026, the number of remittance senders will have decreased by at least 2 percent.
Increases in the amount sent are unlikely, hence growth will be below 2 percent: the only factor explaining the $54 billion in remittances in 2025 (raising to 24 percent of the GDP of the four countries) is the 27 percent increase in the average amount sent, which is a precaution taken by migrants due to the fear of deportation and being unable to continue sending money in the future.
This increase is unsustainable, as it exceeds migrants’ disposable income, which rose from 10 percent to 14 percent over 12 months, at the expense of other expenses and savings. Historical data on remittances show a positive cycle: the average number of remittances rises for 17 months, followed by a gradual decrease for 14 months.
In October 2024, when the latest upward wave of remittances started, it would indicate that by March or April 2026, migrants will no longer be able to send more and will maintain the December 2025 average or will remit less.
Migration as a Factor of Economic Stabilization
Given these challenges, it is urgent to introduce economic stabilization mechanisms that leverage existing transfers and, at the same time, develop innovative solutions to reduce the potential growth of the informal economy.
Outside the financial sphere, Central America has modernized little; its economies continue to rely on low-value exports (with one-digit growth rates), while migration has been the main driver of economic growth. Migrants and household consumption have sustained the economic activity of these countries. Therefore, faced with the slowdown, countries have two options: do more of the same or leverage migration.
More of the same has meant allowing the slowdown to create a cycle of informality, increase social insecurity, and hope that a new wave of migration will solve the problem.
For example, governments have talked about reintegration policies for returning migrants. Still, in practice, this translates into a bottle of water for the returnee, offering English courses to no more than 3,000 people, and hoping for the best. However, this option will further lag the region’s global competitiveness in the age of artificial intelligence, where productivity depends on a skilled workforce to process information technology. Everyone, including the economic elite, loses because their profits will not grow, and people will try to migrate again as they have done before. After all, they had begun to build lives outside their homeland.
The other option is to focus on the economic dynamism factors linked to migration, which would offset the US$1 billion drop in economic growth from reduced remittances in 2026. The strategy is to build financial assets on a large scale by introducing incentives for saving, investing, and borrowing in migrants’ communities of origin, thereby increasing wealth and improving the quality of life for everyone, including those who return to their places of origin.
The region must aim to leverage at least half a million Central Americans abroad and households within the area to formalize and mobilize a total volume of US$500 million through various savings and personal investment instruments and microenterprise credit. Among other things, both the private sector and governments must take migration and its economic impact seriously, not assume it is a catch-all that absolves them of their own responsibilities.
Part of this effort should include introducing innovative policies that ensure that migrants continue their pension contributions from abroad, offering government bonds at affordable amounts—government bonds in the region are far from universally accessible given their cost; for example, the amounts required to purchase bonds vary: El Salvador, US$10,000 (although they offer investment certificates for $100), Guatemala, 1,000 quetzales, Honduras, 100,000 lempiras, Nicaragua, US$1,000.
Other policies include capitalizing on the current political climate in the United States to promote a temporary labor migration with that country, increasing quotas and ensuring orderly migration under H2B visas.
Similarly, given the increasing digitalization of payments and transfers, the formalization of micro-enterprises and merchants, and the need for innovative entrepreneurship, these opportunities emerge as crucial that may help absorb this surplus of labor.
Central America is on the verge of an economic slowdown, which will create further setbacks. While political elites are embroiled in toxic disputes, they are failing to address their countries’ critical issues. Meanwhile, the world is moving forward and preparing for changes stemming from tariff chaos, ongoing military conflicts, and a projected slowdown in the United States in 2026, with unemployment rising from 4 percent to 4.6 percent in 2025 and potential inflation. These approaches can mitigate and help modernize the region.
