Posted on Mon, Mar. 16, 2009
last updated: March 16, 2009 05:46:38 PM
WASHINGTON — The slumping global economy is slowing the amount of money that migrant workers send home to their families in Latin America and the Caribbean, according to a new survey that suggests a troubling trend in a crucial source of revenue for many nations in the region.
The Inter-American Development Bank projects that after nearly a decade of growth, remittances to Latin America and the Caribbean are likely to decline this year. Remittances to the region in the fourth quarter of last year dropped to $17 billion, 2 percent less than in the same period in 2007. Early reports for January suggest a drop as steep as 13 percent.
"This is bad news for millions of people in our region who depend on these flows to make ends meet," bank President Luis Alberto Moreno said.
Moreno said it was too early to predict how much remittances might drop off this year, noting that the length and severity of the economic crisis in major "source countries" — including the United States, Spain and Japan — would drive the decline. Also in play, he said, is "the ability of migrant workers to weather this storm."
The bank — which is surveying banks and money transfer companies — also is working with groups that are polling migrants who send cash back home in hopes of providing more detailed information on how remittance flows may look this year, Moreno said.
Winkendy Augustin, 22, said he'd had to cut back to $50 from $75 the money that he sent his mother in Haiti every two weeks. The BankAtlantic employee said he'd begun cutting back about six months ago as a precaution.
"I know it's a decrease for her, but I have to be prepared,'' said Augustin, who lives in Miami. "With the way things are going, it's survival time right now."
The downturn could be the first since the Inter-American Development Bank began tracking the money in 2000. The monies began to dry up last year, resulting in a flat third quarter and only a slight boost in remittances for the year. Remittances sent home reached $69 billion last year, an increase of just less than 1 percent over 2007, according to the bank's Multilateral Investment Fund. Remittances rose 7 percent in 2007, the first year that the growth rate fell to single digits.
Moreno said the bank's specialists "are still crunching the numbers for January" but that an 11 percent to 13 percent decline is expected.
The slowdown is of concern because remittances play a vital role in many of the region's economies, surpassing the combined amounts from direct foreign investments and development assistance that countries and institutions such as the World Bank provide.
Seven of the region's nations — El Salvador, Guatemala, Guyana, Haiti, Honduras, Jamaica and Nicaragua — receive 12 percent or more of their gross domestic product from migrants who live abroad.
The bank noted that the global slowdown has resulted in job losses in sectors that are "magnets" for immigrant labor, including construction, manufacturing and tourism.
Some countries will be hit harder by a decline in remittances because of exchange rates. For example, the Mexican peso and the Brazilian real have lost ground against the dollar, meaning that remittances from the U.S. to those countries had greater purchasing power.
Moreno said there was some anecdotal evidence of migrants returning home but that there was no such consensus among migration experts.
"Our take is that migrants are likely to exhaust all other options before considering a return to their country of origin," he said.
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