Money sent back home by Mexicans in U.S. drops 12% in August
Posted on Sunday, October 5, 2008
URL: http://www.nwanews.com/adg/Business/239389/
MEXICO CITY — Mexicans living in the United States sent home 12 percent less money in August, the largest drop on record since the Bank of Mexico began tracking remittances 12 years ago, the central bank reported Wednesday.
After years of record gains, remittances have dropped across Latin America. In Brazil, immigration to the United States fell dramatically after the real rose in value against the dollar.
In Mexico, Mexicans began sending less money home this year, economically stranding many small towns and neighborhoods that live off the stipends. The Bank of Mexico said remittances will likely continue to fall because of the “difficult problems the U. S. economy faces.”
The bank said remittances in August dropped 12 percent to $ 1. 9 billion. That compares to $ 2. 2 billion in August 2007.
Migrants living in the United States have sent home $ 15. 5 billion in the first eight months of this year, 4 percent less than in the same period the year before.
In Northwest Arkansas, which has the highest concentration of Hispanics in the state, stores that also do some business in wiring remittances to other countries have noticed the drop-off.
Nancy Diaz, who owns El Rodeo Western Wear store and La Taquiza Authentic Mexican Food restaurant in Lowell with her husband, Ricardo, said she sends remittances through the store.
“The people who frequently send money haven’t sent any lately,” she said.
Diaz estimates that about 25 remittances typically are sent through her store each month, but that has dropped to only five in the past month.
“And those are not big amounts, maybe $ 300 or so,” she said.
The reason, everyone is telling Diaz, is there is so little work available right now.
“Most are saying there is no work here. They are looking to move somewhere else for more work,” Diaz said.
A slowing U. S. economy, especially in the construction sector, and stepped-up immigration enforcement by the U. S. government, including record deportations and increased border security, are behind the drop.
The central bank calculated that unemployment is running considerably higher among Mexican immigrants working in the United States than among the general labor force. Unemployment among Mexican immigrants was about 4. 5 percent in March of last year, and has soared to nearly 7. 5 percent now. The U. S. jobless rate for the general work force is 6. 1 percent.
Remittances are Mexico’s second largest source of foreign income, next to oil exports.
Nearly all of it comes from the United States, home to 98 percent of Mexicans living abroad. At least 11 million Mexicans live in the United States.
Mexico’s economy has largely weathered the global economic crisis, buoyed by a national housing boom and government-funded infrastructure programs.
But Treasury Secretary Agustin Carstens said last week that Mexico will still be hit by the crisis, as tourism drops and continued volatility deflates oil and other commodity prices. He has lowered his annual growth forecast for Mexico to 2. 5 percent.
Mexico’s IPC stock index rebounded Tuesday, then slipped 1. 5 percent Wednesday, evidence that the U. S. crisis is still rattling markets here.
President Felipe Calderon has boasted that Mexico is no longer economically dependent on its powerful northern neighbor, arguing against the old adage: “If the U. S. economy catches a cold, Mexico gets pneumonia.”
But George Grayson, a Mexico expert at the College of William & Mary in Virginia, said there is no way Mexico can escape being hit hard by the U. S. crisis, which comes as the country struggles with rising drug and street violence and falling oil production.
“I think Calderon is sort of like a deer caught in the headlights of four onrushing tractortrailers,” he said.
While illegal immigration to the United States has fallen off recently, he predicted many Mexicans would again turn to the U. S. as the Mexican economy weakens.
“It’s going to mean an outpouring of illegal immigrants to the U. S.,” he said. Information for this article was contributed by E. Eduardo Castillo of The Associated Press, Stacey Roberts of the Arkansas Democrat-Gazette and Tracy Wilkinson of the Los Angeles Times.