Latin American emigrants sent home US$62 billion in remittances last year, a record sum which dwarfed foreign direct investment and overseas aid to the region.
The transfers, a 14 percent rise from 2005, were an economic lifeline which is estimated to have kept up to 10 million families out of poverty. It was the fourth successive year that remittances, which are often informal and hidden from official statistics, exceeded the combined flow of aid and foreign direct investment.
Mexican emigrants led the way by sending back US$22.9 billion, followed by Brazilians, US$7 billion, and Colombians, US$3.9 billion, said the Inter-American Development Bank (IDB), which published the figures over the weekend.
For some of the poorest countries in the Caribbean and central America the transfers made up more than a tenth of GDP. About three-quarters of the remittances originated in the US and most of the rest came from Europe, notably Italy, Portugal, Spain and Britain.
Typically emigrants, who often work on the economic margins as fruit pickers, nannies and cleaners, send home US$100 to US$300 a month. With more than 25 million Latin Americans living outside the region that adds up to the largest remittance market in the world. Analysts say the impact is all the greater because the money goes directly to families who are often in remote areas overlooked by aid and investment. Most of the transfers are spent on food, healthcare, utility bills and education but increasing amounts are invested in property and small businesses, prompting renewed interest in the potential for economic development.
However Don Terry, head of the Multilateral Investment Fund, the IDB agency which monitors the flows, told the Financial Times that a US crackdown on illegal immigrants might be responsible for a recent slowdown in growth.
Remittances to Mexico, for example, grew by 25 percent in the first quarter of the year but had slowed to 5 percent in the last three months and just 1 percent in December, the same month that US officials made highly publicized raids on factories suspected of employing illegal immigrants.
To avoid detection many migrants to the US were thought to be avoiding banks or money transfer agencies and instead sending money back via relatives and friends.
RSS