Remittances to Suffer Reversal

Remittances to LatAm and Caribbean countries are poised to see the first annual drop in a decade, says the IDB. “The break in the upward trend took place after the first semester of 2008. After a flat third quarter, in the fourth quarter remittances dropped to $17bn, 2% less than in the same period of 2007,” adds the multilateral. “For the few countries that have reported data for January, totals were down by as much as 13%,” it adds. Last year expatriates transferred some $69.2bn to their homelands, 0.9% more than in 2007, according to the IDB’s Multilateral Investment Fund, which adds that it is still too early to tell how much remittances could decline this year. The IDB says that in January alone, some countries reported remittances were down by as much as 13%. El Salvador’s remittances, for example, plummeted 11.9% in January, according to the government. They totaled $22.3bn in 2008. Mexico’s remittances, which total about $25.1bn, also dropped 11.9% in January, says Morgan Stanley. A decline in remittances is trouble for many countries that are heavily dependent on them to grow. For instance, based on government information, about 27% of Haiti’s GDP comes from remittances, as does 19.6% of Honduras’, 17.0% of El Salvador’s, and about 15% of Jamaica’s and Nicaragua’s.