The deep impact of the slowdown in the US economy has already started showing its ugly face as the amount of money sent back home last year by millions of Latin Americans grew at the slowest rate in nearly a decade. Take for instance the fact that for the first time since the Inter-American Development Bank (IDB) started to study remittances in 2000, the increase is less than 10%. The slowdown has had the most profound impact on Brazil and Mexico where it fell by 4% and 1% respectively. Despite the decline however, the total amount sent back home by the Latin Americans is quite huge, that is, $66.5 billion. But the huge decline can not be ignored too.
Asia outnumbers Latin America when it comes to receiving money from the overseas workers but on a per capita basis remittances are more important to Latin America than any other region in the world. At least 20 million Latin American families are estimated to receive regular funds from their relatives abroad. Mexicans sent back nearly $24bn last year, almost entirely from the US – roughly the same as foreign investment and the second source of foreign exchange after oil. Yet IDB officials are alarmed by the situation in Mexico. The bank estimates that about 600,000 Mexicans did not receive remittances as a result of the turndown last year. Despite not having any drastic or dramatic impact on the Mexican economy the trend is expected to affect the economy to a large extent if no corrective measures are taken. Especially when the construction industry which employs a large number of Mexicans is not faring too well.
Tags: Banking, IDB, Mexico, Remit2Home, Remittance
