WASHINGTON — Latin American and Caribbean migrants sent relatives back home a record $66 billion last year, but the remittances grew by the lowest rate ever, with Mexico and Brazil showing significant slowdowns, a study released Tuesday shows.
Remittances, which now are considered a crucial part of many Latin American and Caribbean economies, rose 7 percent in 2007, the first year that the growth rate has been in single digits.
The region's top recipients, Mexico and Brazil, are weighing down the averages, said Don Terry, the president of the Multilateral Investment Fund, the unit of the Inter-American Development Bank that's been looking at remittance trends since 2001.
Terry said a combination of factors was behind the overall slowdown in growth, from a weak U.S. economy and dollar to a stronger euro and healthy growth rates among many Latin American nations.
"Those remittances that they send back home don't go as far as they used to," he said.
Brazil is the only country that saw its remittances decline, receiving $7.1 billion last year, down from $7.4 billion in 2006. Terry said this occurred because of Brazil's robust economy and the strengthening of its currency from 3.7 reals per dollar six years ago to just 1.4 reals today.
Once the engine of remittance growth, Mexico got $24 billion last year compared with $23 billion in 2006, a modest 4 percent increase.
These numbers contrast with double-digit gains by many countries, Terry said.
"Is this a bend in the road or a new direction?" he asked. Some of the new trends will come into sharper focus this year.
Terry projects that remittance growth from the United States will be flat in 2008. In contrast, there will be strong growth from Spain, which has received a large number of Bolivian and Ecuadorean migrants and, increasingly, Central Americans.
Terry estimates that Spain will send around $8 billion in remittances to Latin America and the Caribbean this year, compared with $6.5 billion last year. This means that on a per capita basis, Spain will surpass the United States, which is expected to send $48 billion this year, about the same as last year.
Recent numbers already show that Mexican migrants in the United States are sending less money back home than they were before. They sent $1.6 billion home in January, compared with $1.8 billion for the same month last year, a 6 percent drop.
This is only partly because of the U.S. economic slowdown, Terry said, since remittance growth from Central American migrants is still rising briskly.
Mexicans and Central Americans work for similar industries, such as construction and food service, though often in different U.S. regions. In the past, analysts have suggested that Mexicans are more exposed to the U.S. immigration backlash because they've moved into areas where there's historically been little Hispanic presence.
Another possible explanation is that Central American migrants tend to come alone, while Mexicans bring more family members and therefore need to send less money back home.
The slowdown is of concern because remittances play a vital role for many of the region's economies, surpassing the combined amounts obtained from foreign direct investments and development assistance provided by countries and institutions such as the World Bank.