Remittances plunge - Flow dips to three-year low
Published: Friday | August 14, 2009
Remittance inflows to Jamaica have already dropped close to 16 per cent since January, and a multilateral agency is predicting that money transfer markets will continue to slide and that the drop would be widespread across Latin America and the Caribbean region.
The Inter-American Develop-ment Bank (IDB) estimates that remittances will decline 11 per cent year-on-year, based on its annual survey of migrant workers, and that this could affect some four million people funded by relatives working overseas.
Average transfers were found to have slipped from US$241 to US$230 per transaction, while the frequency is down from 15 times per year to 12 per migrant.
The IDB's Multilateral Invest-ment Fund, which tracks the flows annually starting this decade, estimates that remittances will fall to a three-year low of US$62 billion in 2009.
"The crisis is clearly limiting migrants' capacity to send money home," said IDB president Luis Alberto Moreno.
"Nevertheless, remittances have decreased less than other private financial flows to the region, as migrants continue to make sacrifices to provide for their families."
This decline is a reversal for the lucrative remittance sector, whose nominal money flows from rich industrialised countries have up to now been growing annually, though the rate had recently slowed.
In Jamaica's case for example, remittances over this decade grew between 9.1 per cent and 20 per cent per year - averaging 12.6 per cent per year in the last eight periods - but last year, the flows improved only 2.9 per cent.
Between 2000 and 2008, the transfers grew two and a half times from US$789 million to US$2.02 billion, amounting to 14 per cent of gross domestic product.
Loss of migrant jobs
The brake on remittances is due to the global recession, as reaffirmed by the IDB's new study - conducted by Manuel Orozco of the Inter-American Dialogue, a Washington think-tank, in collaboration with MIF remittances specialists - and the agency cites the loss of migrant jobs in countries like the United States, Japan and Spain for the regional fall-off.
Jamaica's remittance markets are mainly the US, United Kingdom, Canada and The Cayman Islands.
Between January and June, BOJ recorded flows of US$854 million, down 15.9 per cent from US$1 billion in the first half of 2008.
Projected to year end, and assuming the quarterly average of US$427 million is maintained, Jamaican remittances would come in at just over US$1.7 billion this year - US$300 million less than 2008 and comparative to the market's performance in 2006.
The numbers would reflect a more than 15 per cent decline, year-on- year, tracking ahead of the regional 11 per cent average estimated by IDB.
The MIF-Orozco survey sampled 1,350 migrant workers March to June, and analysed their job situations as well as changes in spending patterns.
"The findings in the new report are in line with the MIF's analysis of central bank data on remittance receipts," said the IDB Wednesday.
"According to these official sources, remittances dropped 15 per cent in the second quarter of 2009 with respect to the same period last year. In South America, Central America and the Andean region the slide was less steep than in previous quarters, while in Mexico and Caribbean countries the downward trend accelerated."
The study found 40 per cent of remitters still working will send home less, while 49 per cent said they will maintain family support at last year's levels, and that the receiving countries most affected would be Cuba and Dominican Republic.