Friday, May 09, 2008

Impacts on remittances from US to Latin America

A recent report released by the Inter-American Development Bank studies  the patterns of remittances sent back by Latin American immigrants in the US to families in their home countries:

The current survey goes beyond simply tallying remittance totals and starts to probe the reasons behind the shift in remittance flows. The results suggest that two principal forces are affecting the lives of Latin American immigrants and the flow of money they send home.

The first is the effect of the U.S. economic downturn on the sectors employing large numbers of Latin American immigrants. Impacting the incomes of workers directly, the downturn is clearly reducing the capacity of immigrants to support their families back home.

The second, and perhaps more significant force, is the effect of the immigration climate which has been emerging over the past two years and is changing the dynamics of remittances to Latin America.
In short, the report finds that the economic downturn in the US is impacting remittances, but so is the increasing hostility towards immigrants seen in communities across the US.  The total level of remittances may not decrease this year, but the number of immigrants sending money back is declining.  As a consequence, the number of families in Latin America facing hardship from a lack of remittance money is increasing at the same time that basic food and fuel costs are rising.  (The IADB report is also discussed in this Wall Street Journal article). 

In the most recent information from El Salvador, according to El Salvador's Central Reserve Bank, remittances in the first 3 months of 2008 totaled $912.2 million, a growth of 6.1% compared to the same period a year ago.  So El Salvador may not yet be seeing the impact of these larger forces.

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