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Following the stabilization of remittances entering Latin America and the Caribbean (LAC) in 2010, money sent to the region is likely to rise this year, but the FX impact and expected higher inflation may reduce purchasing power in many countries, according to IDB's Multilateral Investment Fund (MIF).
Remittances to the region grew slightly by 0.17% to US$58.9bn last year after a sharp drop of 15% in 2009, following the global financial crisis and economic downturn, MIF said in a report.
MIF noted that even though money sent from abroad started to stabilize last year, it did so with "significant differences among subregions," with a 3.1% increase for Central American countries and a 4.1% decrease for Andean countries.
The sharpest difference was seen in the case of Haiti, with a 20% jump to almost US$2bn following the January 12 earthquake, and Brazil, which saw a 15% decrease to US$4bn, "largely attributable to its continued strong economic performance, which has given Brazilian migrants a powerful incentive to return home."
As for this year's prospects, MIF expects remittances to continue on the recovery path, but not to surpass double-digit rates seen prior to the crisis. The recovery's speed will mainly depend on labor markets in countries such as the US and Spain, the report reads.
To read the full report in English, go to this link
To read the full report in Spanish, go to this link