Worry in Americas over decrease in remittances

Remittances are a vital source of income throughout Latin America and the Caribbean; they outnumber all foreign aid and direct investment into the region and totaled more than $60 billion last year alone. However, economists are worried over the impact of a recent slowdown in money transfers to the region:

“Remittances will definitely suffer a slowdown. We cannot depend only on remittances. We must increase our productive base, especially our exports," Honduras' central bank president, Gabriela Nunez, told Reuters this week.”

The development is nothing new, mind you; last May we said that the Inter-American Development Bank noted a decrease in money transfers in the beginning of the year. However, the slowdown in remittances can be traced to two very closely related factors - stronger anti-immigrant measures and a housing slump in the U.S.:

“Some data watchers think Latin America may be footing the bill…“It appears that job losses among undocumented workers, principally from Mexico and other Latin American countries, have been serving as a buffer against job losses by resident or documented U.S. workers," Deutsche Bank economist Peter Hooper and his colleagues wrote in a recent report.”

If the trend continues then several countries could face serious economic problems. This seems to lend credence to a post we published last year on the region relying too much on money transfers.

Sources- BBC News, Wikipedia, Reuters, The Latin Americanist

Image- Overseas Development Institute