The Latin America Advisor, an excellent publication by the Interamerican Dialogue in Washington D.C. asked this question for its Feb. 6-19, 2014 issue as a preview of the release of Manuel Orozco’s document on remittances to the region that will be presented February 27, 2014 at the Dialogue. Overall remittances to Latin America and the Caribbean were flat in 2013 as compared to 2012. A few countries, including Bolivia, Honduras and Guatemala saw significant growth, while remittances decreased to countries including Mexico and Brazil. You can view/download this issue of the Latin American Advisor to read Manuel Orozco’s insightful comments, as well as comments by Earl Jarret from the Jamaica National Building Society, Mario Trujillo, CEO of Dolex Dollar Express and Hugo Cuevas-Mohr of IMTC/Mohr World Consulting.
Read these short excerpts:
Manuel Orozco: ” The reasons for this level of growth are associated with problems related to U.S. migration policy, demographics and slow economic growth in Spain and Argentina. Spain’s economy has not recovered, and immigrants are facing increasing hurdles to finding work. In fact, unemployment among Latin American immigrants was over 35 percent last year. In the case of Mexico, two factors have affected remittance sending in particular. The first is continued deportations, and the second is a decline in earnings among undocumented Mexican immigrants. The number of undocumented migrants with lower earnings has increased.
Earl Jarret: “Jamaica’s remittance data indicates that inflows for January to November 2013 amounted to $1.87 billion, a net growth of 2.9 percent over 2012; while outflows were $219.9 million. A closer examination of the Jamaican economy shows that the IMF EA’tended Fund Facility, implemented last May, has, among other effects, led to a devaluation of the Jamaican currency by 8.5 percent. Historical studies reveal that the currency’s devaluation tends to affect remittances by reducing the volume of transfers in U.S. currency.”
Mario Trujillo: “Remittances (and families) have suffered significantly since the Great Recession. While the unemployment rate has declined in the United States (mainly due to a drop in the participation rate), the economy continues to experience an anemic employment-based recovery. In addition, other factors are preventing remittances from improving further. These include a lack of immigration reform, increased inefficient regulatory and compliance oversight, and banks exiting the business not only for immigrant related services, but for all services for people who are under-banked. In Mexico alone, HSBC, Banamex and many other banks, will not handle cash remittances and have been closing consumer accounts.”
Hugo Cuevas-Mohr: “The money transfer market in Latin America is shifting in a number of ways. Take Brazil and Bolivia. Inbound remittances to Brazil are slightly declining even if more remittances are moving to formal channels, but outbound remittances are increasing in double digits. These outbound remittances are going mainly to Bolivia, but also to Paraguay, Colombia and Peru. With Mexico, the decisions of Banamex to move away from the remittance business and Bancomer to limit amounts has impacted the market. But that doesn’t explain it all. Migratory policy in the US has had an effect on Mexican migrants.”
View the Feb 9-17 Issue here:[gview file=”https://crosstechpayments.com/wp-content/uploads/2014/02/LatAdvisor-02-14.pdf”]