Northern America: Latin America Remittances Making a Healthy Recovery in 2010

Latin America Remittances Making a Healthy Recovery in 2010 

 Remittance flows, the lifeline of a lot of Latin American economies, are ticking back up in 2010 after a steep 12 % decline in 2009, said the World Bank today.

The Outlook for Remittance Flows 2011-12 states that remittances are expected to grow by 2 % in 2010 reflecting a modest but steady recovery in the United States and a continuing pattern of resilience to the effects of the world economic crisis of 2008-2009.

Beyond 2010, medium-term prospects improve significantly for the Latin American & Caribbean region (LAC) with a increase pace of 7.6 % in 2011 and 10 % in 2012 to reach $69 billion in total remittances, according to the statement.

Mexico confirmed its top position as remittance destination in LAC with an estimated $22.6 billion received in 2010, while claiming the third spot globally after India and China. Other top recipients include: Brazil ($4.3 billion), Guatemala ($4.3 billion), Colombia ($3.9 billion), El Salvador ($3.6 billion), Honduras ($2.7 billion and Dominican Republic with ($3.4 billion). Remittance flows have a larger imprint on Central American and Caribbean economies where they contribute between 10-20 % of GDP. Honduras leads the pack with 19.3 % of GDP followed by Guyana with 17.3 % and El Salvador with 15.7 %, the study said..

“This is good news, especially when taken together with other good news such as increase in trade and direct foreign investment, which together have contributed to a positive increase rate in the region’s economies,” said World Bank senior economist Humberto Lopez.

Lopez warned that persistent unemployment, volatile currencies and anti-immigrant sentiments in high-income nations could put the brakes on remittances flows but, for the moment, there's an upwards tendency south of the US border.

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Recovery in the US housing sector, a large employer of Mexican immigrants, in the first half of 2010 was accompanied by increase in remittances to Mexico, the statement notes. National and sector level employment data for the US tell a similar story of a recovery in migrant employment in the first half of 2010, particularly in hospitality, construction, and wholesale and retail trade.

Remittance flows will remain resilient and contribute to upwards trends to high-income destinations, especially OECD nations, on account of a positive net migration flow, despite a significant drop in a lot of migrant corridors due to the crisis.

Outlook for Remittance Flows 2011-12 notes that the region's top migration corridors include Mexico–US (accounting for 11.6 million migrants in 2010), El Salvador–US, Guatemala–US and Colombia-US. In the Caribbean top corridors include: Dominican Republic–US, Jamaica–US and Haiti-US. The region's total stock of immigrants is 6.6 million or 1.1 % of people (compared to 215.8 million or 3.2 % for the world).

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Globally, officially recorded remittance flows to developing nations are estimated to increase by 6 % to $325 billion in 2010. This marks a healthy recovery from a 5.5 % decline registered in 2009. Remittance flows are expected to increase by 6.2 % in 2011 and 8.1 % in 2012, to reach $374 billion by 2012.