Thread: Buoyed by Recovery, Migrants Send Home More Money

Buoyed by Recovery, Migrants Send Home More Money

By MIRIAM JORDAN And PAULO TREVISANI

Immigrants from most Latin American countries sent home substantially more money at the beginning of 2011 than they did a year earlier, signaling the economic recovery in the U.S. and other developed countries has improved prospects for foreign workers.

Guatemala, Honduras, El Salvador and Mexico received between 6% and 16% more revenue from remittances in January than in the same month last year, according to the International Fund for Agricultural Development. The exception was Brazil, which experienced a 3% decline, said the U.N. agency.

Funds remitted to Latin American countries rose 6% and 16% in January, compared to the year-earlier month.

The January figures, coupled with 2010 data to be released Monday by the Inter-American Development Bank, confirms the end of a downward trend in remittance flows, which had tumbled 15% between 2008 and 2009 as the recession took its toll.

Remittances to Latin America and the Caribbean reached $58.9 billion last year, a 0.2% increase over 2009, according to the IDB. "That's significant because we had seen such a precipitous drop from 2008 to 2009" as the U.S., Spain and Japan, host to many blue-collar immigrants, slid into recession, said Natasha Bajuk, co-author of the IDB study.

The funds channeled home by immigrants are critical to their families and to many developing countries, where remittances exceed foreign direct investment, provide hard currency for government acquisitions and help spur economic growth.

The purchasing power of remittances has weakened, however, for families in countries where local currencies have appreciated against the dollar.

Currencies in Latin America gained 4.4%, on average, against the dollar during 2010, according to the IDB report. In particular, "the appreciation of the Brazilian real and the peso in Colombia makes a big impact on people receiving remittances from the United States," said Robert Meins, a remittance expert at the IFAD.

The Brazil real has appreciated nearly 50% against the dollar since December 2008.

The purchasing power of remittance recipients is further eroded by inflation. That puts pressure on senders like Silca Teixeira, a Brazilian housekeeper in Newark, N.J.

Ms. Teixeira says she has to send "more dollars...to help my mother pay the same expenses." In early 2010, Ms. Teixeira was wiring $1,000 to cover a monthly mortgage on a two-bedroom apartment in her hometown in Brazil. By August, when she made her final payment, the amount she had to send leapt to $1,300 because of the real's appreciation.

The decline in remittances to Brazil in January, an exception for Latin America, suggests immigrants from South America's booming economy are heading home to take advantage of opportunities there, says Mr. Meins.

In Mexico, the appreciation of the peso and inflation have also adversely affected recipients of remittances, but to a lesser extent than in Brazil and Colombia.

In January, remittance flows to Mexico jumped 5.8% over the same month in 2010, and the average value of each remittance rose nearly 1% to almost $300 compared to January last year. Once the remittances were converted into pesos and inflation was discounted, their real value shrunk by 3.2% in January relative to the same month last year.

For all of 2010, Mexico saw a 0.1% increase in remittance revenue over 2009. Central American countries, where currencies are pegged to the greenback, don't feel the effects of currency volatility. The region, which includes Guatemala, El Salvador and Honduras, also showed a more steep recovery in remittance flows in 2010, or a 3.1% increase over the previous year. Immigrant workers in the U.S. are recovering jobs more quickly than the overall population, experts say. Thus, remittances are expected to keep rising, even if growth will be gradual, they predict.

The USA needs to stop ALL personal money transfers out of the country other than confirmed business transactions and for emergency purpose. NO sending money from illegals to family back in tacoland.

Originally Posted by BillCunnane

The USA needs to stop ALL personal money transfers out of the country other than confirmed business transactions and for emergency purpose. NO sending money from illegals to family back in tacoland.

Or they should be charged 40%.

I think a total cutoff would be in line now..40% charge later on once the outbound flow decreases.