Mexico Sees Record Drop in Remittances
Money sent home by Mexicans abroad plunged a record 15.7 percent in 2009 as migrants worldwide struggled to find work during the global economic slowdown, the central bank reported Wednesday.
Remittances - Mexico's No. 2 source of foreign income after oil exports - totaled $21.2 billion in 2009, compared with $25.1 billion in 2008, the bank said.
Since the bank began tracking remittances in 1996, it has recorded just one other annual decline - a 3.6 percent decrease in 2008, as the world financial crisis exploded.
Central bank president Agustin Carstens attributed the latest drop to the weak economy in the United States and the increased difficulty Mexicans are having securing employment there. More than 11.8 million Mexicans live in the U.S.
Carstens said a 1.3 percent uptick in remittances in December, compared to the previous month, gave some hope for a recovery.
"It is just one figure, but it could indicate the beginning of a relative stabilization in the drop in remittances, and it would be congruent with the fact that economic activity in the United States is about to go from negative to positive," Carstens said.
An analyst was less optimistic, saying that employment levels in the United States "remain very bad" and remittances to Mexico will probably continue to decline through the first half of 2010 when compared to the same period of 2009.
"It is important to remember that many Mexicans are employed in very volatile sectors that remain depressed, like construction, manufacturing, restaurants," said Hector Rodriguez, a researcher at the Graduate School of Public Policy and Administration in the northern Mexico city of Monterrey.
Experts blame a crackdown on illegal immigration that has stemmed the flow of those heading north to seek work as well as the U.S. recession, in which many Mexicans, especially construction workers, have been laid off.
Mexico receives the largest amount of remittances in Latin America and the third largest in the world, after India and China. The country was also the hardest hit in Latin America by the U.S. economic slump with a drop of about 7 percent in Mexico's GDP.
While remittances represent less than 4 percent of GDP, their decline is being felt in towns across Mexico, where lines at Western Union counters have all but disappeared. New businesses financed by migrant money are no longer opening and construction has stopped on homes that have been built in stages as cash arrived from those working abroad.
In the first part of the decade, Mexico's remittances grew rapidly - from $9 billion in 2001 to $26 billion in 2007 - because of swelling migration and better record-keeping.
© 2010 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. Remittances - Mexico's No. 2 source of foreign income after oil exports - totaled $21.2 billion in 2009, compared with $25.1 billion in 2008, the bank said.
Since the bank began tracking remittances in 1996, it has recorded just one other annual decline - a 3.6 percent decrease in 2008, as the world financial crisis exploded.
Central bank president Agustin Carstens attributed the latest drop to the weak economy in the United States and the increased difficulty Mexicans are having securing employment there. More than 11.8 million Mexicans live in the U.S.
Carstens said a 1.3 percent uptick in remittances in December, compared to the previous month, gave some hope for a recovery.
"It is just one figure, but it could indicate the beginning of a relative stabilization in the drop in remittances, and it would be congruent with the fact that economic activity in the United States is about to go from negative to positive," Carstens said.
An analyst was less optimistic, saying that employment levels in the United States "remain very bad" and remittances to Mexico will probably continue to decline through the first half of 2010 when compared to the same period of 2009.
"It is important to remember that many Mexicans are employed in very volatile sectors that remain depressed, like construction, manufacturing, restaurants," said Hector Rodriguez, a researcher at the Graduate School of Public Policy and Administration in the northern Mexico city of Monterrey.
Experts blame a crackdown on illegal immigration that has stemmed the flow of those heading north to seek work as well as the U.S. recession, in which many Mexicans, especially construction workers, have been laid off.
Mexico receives the largest amount of remittances in Latin America and the third largest in the world, after India and China. The country was also the hardest hit in Latin America by the U.S. economic slump with a drop of about 7 percent in Mexico's GDP.
While remittances represent less than 4 percent of GDP, their decline is being felt in towns across Mexico, where lines at Western Union counters have all but disappeared. New businesses financed by migrant money are no longer opening and construction has stopped on homes that have been built in stages as cash arrived from those working abroad.
In the first part of the decade, Mexico's remittances grew rapidly - from $9 billion in 2001 to $26 billion in 2007 - because of swelling migration and better record-keeping.
Popular on CBSNews.com
- Man dead in "truly shocking" London attack 192 Comments
- Who were the 4 U.S. citizens killed in drone strikes?
- Mexican volcano on verge of eruption 15 Photos
- People cling to car in "sidewalk skiing" stunt Play Video
- Graphic video: Man dead in "truly shocking" London attack Play Video
- N. Korea sends top envoy to China as tensions mount
- Volcano's rumbles may signal coming to life Play Video
- Graphic video: knife-wielding suspect talks to camera Play Video
While indeed Mexico has the 12th largest economy in the world, it also ranks down about #54 in terms of GDP PER CAPITA and has a grossly distorted income distribution. Meaning, most Mexicans do NOT benefit from that wealth due to overpopulation and policies that concentrate wealth in the hands of the few.
Laying off 10% of one?s police force may be a start at dealing with corruption, but it?s hardly enough in a country whose former president proudly proclaimed that ?a politician who is poor is a poor politician?. And while Walmart is indeed a major employer in Mexico, WALMART creates more jobs in that country than the world?s richest man, Carlos Slim Helu, a Mexican. Furthermore, Mexico relies heavily on the US and NAFTA for its exports. Mexico is one of the U.S.?s top five trading partners along with Canada, China, Japan, and Germany, yet most of its people still live in poverty?
Furthermore, remittances are Mexico?s #2 source of foreign income after oil exports. That $20 billion is used for consumption largely by Mexico?s poor thus relieving the government of the responsibility of dealing with creating jobs for them.
As for the fence, surely the author has read that deaths by illegal aliens crossing into Arizona are UP?because the fence in CA and TX does indeed work and is diverting smugglers of illegal aliens to cross through more treacherous terrain in unfenced AZ. As the saying goes, a fence is only as strong as its weakest link and Arizona alone currently has almost half a million illegal aliens, not to mention the many more who use it as a pathway to other states.
The Bank of Mexico's prez says that the outlook for Mexicans to get more employment in the US (so they can send more money back to Mexico) doesn't seem like it will improve . . . which begs the question:
Why isn't Mexico more concerned about creating JOBS IN MEXICO FOR MEXICANS, instead of worrying about taking away American jobs -- ????????
And, the answer is: b/c the ruling elite in Mexico City doesn't give a ratsahhhhz about creating jobs in Mexico. As long as the 200 Families are still in control of everything in Mexico, things will never change there (and haven't, since 1821, when Mexico gained its independence, btw).
We now have Africans, Chinese, Haitian, Muslims, and high-school kids looking for work. But most of our high-school kids are going in the military and others are hoping to get their dads job and /or company when they retire.
We really need to control this immigration problem.