The amount of money that Mexicans working in the US sent back home dropped 3.6% in 2008, as the rising US jobless rate took a toll on immigrants. It was the first decline in remittances recorded since Mexico began tracking money flows from abroad 13 years ago.
The drop to $25 billion from $26 billion in 2007, reported Tuesday by Mexico's Central Bank, is nearly twice what the government forecast. It could foreshadow a bad year ahead for Mexico. After oil, remittances are Mexico's second-biggest source of hard currency, ahead of tourism and manufactured goods, two other suffering sectors.
Mexico's remittance woes aren't unique. In the past two decades, workers in poor countries have grown increasingly dependent on job opportunities in countries experiencing sustained growth -- the US for Latin American and Caribbean migrants; Western Europe for Africans and Eastern Europeans; the Gulf Emirates for Pakistanis and Filipinos.
Hunter College researcher Margaret M. Chin, who surveys immigrants in New York, reports Lunar New Year remittances to China are showing an average decline of 20% this year. She says many restaurant workers, livery drivers and others in the service economy have had to cut back on the number of hours they work each week.
Remittances are the single largest source of national income in many countries. The Inter-American Development Bank reports high levels of dependence in Haiti (26%), Guyana (24%), Jamaica (18.5%) and El Salvador (18%).
The drop in capital flows from migrants working abroad is an indicator of how closely Mexico's economy is tied to that of the US, particularly its housing and services sector. Whereas decades ago most Mexicans working in the US were in agriculture, a report revealed just 5% of migrants today work on US farms, while 38% are in construction and manufacturing, and another 57% in services.
That shift has led to a broad contraction of employment opportunities for immigrants across the US economy. In December, the Pew Hispanic Center reported 239,000 immigrant Hispanics joined the ranks of the US unemployed during the year ending with the third quarter of 2008. Almost 100,000 jobs were in construction alone, the report estimated. (info from The Wall Street Journal)