Remittances to Mexico Fall for First Time
January 30, 2009 by Jennifer Brandt
The amount of money that Mexicans working in the U.S. sent back home dropped 3.6% in 2008. 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, could foreshadow a bad year ahead for Mexico. After oil, remittances are Mexico’s second-biggest source of hard currency.
The reduction in remittances will be felt more regionally than nationally and is particularly relevant for Mexico’s central and southern states, which receive the majority of remittances. Economic growth in Mexico’s North has averaged between 4 percent and 5 percent since 1995, compared to growth of between 1 percent and 2 percent in southern states.
This trend is continuing and is largely due to the northern regions’ industrial economies that are based on maquiladora exports to the United States. In contrast, the central-southern state of Michoacan, one of Mexico’s least-developed, receives more than 10 percent of Mexico’s remittances — about $615 per person, with approximately one out of 10 households receiving payments.
Remittances keep many families in Mexico’s less-developed regions afloat. If Mexican President Felipe Calderon does not create jobs for these communities, slowing migration and fewer remittances will tighten family budgets while increasing the number of unemployed, mostly younger males who would otherwise have migrated to the United States. While tightened budgets and rising unemployment might not spur a large social uprising, they could lead to increases in crime and general discontent, not only in poorer states but also in larger cities that might experience population increases if migration to the United States slows.
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