Record drop in remittances to Mexico

Much like the rest of the Americas, the global economic slowdown has hit Mexico very hard. The country has been officially in recession for at least eight months and the GDP dipped by over 10% last year. Remittances to Mexico declined sharply by the end of 2009 while almost concurrently money transfers from Mexico notably increased.

With an ailing economy and remittances to Mexico counting as the country’s second highest source of foreign income the last thing Mexico could afford was to have money transfers nosedive. Unfortunately, Mexico's central bank confirmed those fears:

Money sent home by Mexicans abroad plunged a record 15.7 percent in 2009 as migrants worldwide struggled to find work during the global economic slowdown, the central bank reported Wednesday…

Since the bank began tracking remittances in 1996, they have recorded just one other annual decline — a 3.6 percent slide in 2008, as the world financial crisis exploded.

Central bank president Agustin Carstens attributed the drop to a weak economy in the United States and the increased difficulty Mexicans are having securing employment there. More than 11.8 million Mexicans live in the United States.

Earlier this month a pair of Mexican senators estimated that the decrease in remittances would lead to the drop below the poverty line of at least two million families.

Other countries throughout the Americas that rely heavily on money transfers (for example, El Salvador) have also seen a decrease in remittances throughout 2009. This will surely hinder economic recuperation from the worldwide recession as well as slow down long-term economic growth.

Image- LAHT
Online Sources- LAHT, Foreign Policy, AHN, ABC News, Reuters, The Latin Americanist