Remittances to Latin America recovered except in Mexico

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Remittances to Latin America

Remittances to Latin America rebound — except in Mexico. (Shutterstock)

Remittances to Latin American countries overall have recovered from a decline during the recent U.S. recession, with the notable exception of Mexico, according to a Pew Research Center analysis of World Bank data.

Remittances have far outpaced foreign aid in helping lift people out of poverty in Latin America, the study released Friday by Pew Research Center notes. In 2011, remittances totaled $53.1 billion, more than eight times the amount of official aid, the report says.

The United States is the most important source of money sent home by migrants to the 17 Latin American nations as a group that are the focus of this report. U.S. remittances accounted for three-quarters of the total in 2012—-$41 billion out of $52.9 billion.

According to the study, The decrease for Latin America overall was fueled by a falloff in remittances to Mexico, which receives more than 40% of all remittances to Latin America.

By contrast, of the dozen other nations with remittances of more than $500 million a year, seven—-Bolivia, El Salvador, Guatemala, Honduras, Nicaragua, Paraguay and Peru—-are estimated to have higher remittances in 2013 than during the recession.

Flows have not recovered from recession-era declines in Argentina, Colombia, Costa Rica, Dominican Republic and Ecuador.

The decline in remittances to Mexico—-98% of which come from the U.S.—-is linked to economic changes in the U.S., where one-in-ten Mexican-born people live.

The U.S. housing market crash hurt Mexican immigrants for whom the construction industry is a major job source. Another factor explained in the study, is that it  could be the decline in the Mexican immigrant population in the U.S. since the onset of the recession, due to decreased arrivals and increased departures, including deportations.

Among the other findings in the report:

  • The U.S. accounted for 78% of remittances to Latin America in 2012. Spain, the next-largest sending nation, contributed 8%, or $4 billion. Canada, which ranked third, sent 1%.
  • Remittances are a larger source of money to Latin America than official foreign aid. In 2011, when foreign aid to Spanish-speaking Latin America nations totaled $6.2 billion, formal remittances were more than eight times that—-$53.1 billion.
  • Money sent home by migrants represents a varying share of the gross domestic product throughout Spanish-speaking Latin America. The highest shares are in El Salvador (16.5% in 2012), Honduras (15.7%) and Guatemala (10.0%).
  • Remittance totals are strongly linked to the size of a particular country’s immigrant population in the U.S. The Latin American nations that get the highest share of their remittances from the U.S.—-Mexico, El Salvador, Guatemala and Honduras—-also are the top four in terms of the share of their emigrants who live in the U.S.
  • The U.S. is the largest source of remittances worldwide, sending a total of $123.3 billion in 2012. Saudi Arabia is next, followed by Canada. Among all countries, the largest recipient of remittances is India, with an estimated $71 billion in 2013. China ranks second, followed by the Philippines and Mexico.

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