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Remittances to LatAm, except Mexico, recover to pre-recession levels

Bnamericas Published: Tuesday, November 19, 2013

Remittances to Spanish-speaking Latin American countries overall have recovered from a decline during the recent recession, with the notable exception of Mexico, according to a study by the Pew Research Center, a non-partisan think-tank in Washington.

Migrant remittances to Mexico - nearly all of which came from the US- will total about US$22bn this year, or 29% below the 2006 peak.

But for all other Spanish-speaking Latin American nations (excluding Brazil), remittances this year will total US$31.8bn, slightly higher than their 2008 peak.

Remittances from all sources sent to Spanish-speaking Latin American countries have more than doubled since 2000 but remain below their peak in 2007, the year in which the US Great Recession began.

The Pew Research Center's 2013 estimated total of US$53.8bn is 13% below than the figure recorded in 2007, which saw a record US$61.6bn hauled in.

In 2012, the US was the source of 78% of remittances sent to Latin America, with Spain accounting for 8% and Canada at 1%.​

According to the Pew Research Center, the decline in remittances sent to Mexico relates to the crash in the US housing market, which traditionally employs many Mexicans.

Another factor could be the decline in the Mexican immigrant population in the US since the onset of the recession, due to decreased arrivals and increased departures (including deportations).

Through the end of 2012, migration from the US to Mexico likely equaled or even exceeded the reverse flow, the think-tank said. 

Interestingly, Pew said that research is inconclusive about the impact of remittances on a receiving nation's economy. Some studies have found that labor force participation declines in households that receive remittances, which hurts economic growth. 

However, the majority of remittances is spent on food, clothing and other day-to-day needs, according to the research.

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