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Remittances at four-year low - But stability forecast for 2010

Published:Sunday | March 7, 2010 | 12:00 AM

Money transfers from Latin American and Caribbean migrants to their home countries are likely to stabilise in 2010 after suffering a 15 per cent drop in 2009, according to a new report last Thursday by the Inter-American Development Bank's Multilateral Investment Fund (FOMIN).

Remittances to the region fell to US$58.8 billion last year, below the level reached in 2006.

Jamaica's inflows also dipped but at a rate below the average for the region.

Jamaica's share of remittances was reported at US$1.798 billion, or 11.6 per cent lower than the US$2.03 billion of inflows in 2008, a peak year for inflows.

The 2009 inflows represent a return to a four-year low when remittances were at US$1.77 billion.

Mexico remained the dominant market with more than US$21 billion of remittance receipts, down 16 per cent from US$25 billion in 2008.

Brazil's receipts dropped 34 per cent, the largest decline, from US$7.2 billion to US$4.75 billion.

first recorded fall

Last year marked the first time in which the regional volume of remittances was lower than the amount sent the year before since the FOMIN started tracking these flows in the year 2000, said the International Development Bank.

The average growth rate up to 2008 was 17 per cent per annum, the bank said, but noted that signs of a slowdown in transfers was evident from 2006.

The slowdown has been attributed to the economic slowdown and job losses in big transfer markets such as the United States, Spain and Japan.

Until 2009, the average annual growth had been 17 per cent, although it started to slow in 2006 and diminished considerably in 2008, as the global economic crisis hit migrant employment and income levels in countries such as the United States, Spain and Japan.

But FOMIN says the signs of a recovery in regional remittances began to emerge in the last quarter of 2009, tracking with early signs of recovery economic recovery in some big global markets.

But it does not expect a robust return to former remittance highs.

"In the short term, significant recovery in the volume of remittance flows is unlikely, largely due to the uncertain outlook for economic growth in traditional remittances sending countries," the report said.

"But the signs of stability of the last months could provide a basis for an estimate of stabilised remittance levels, or event the beginning of a new period of single-digit growth in the near future."

But even as jobs return - expectations are they will, but slowly - and incomes improve, the report suggests that migrants will try to rebuild savings, thereby limiting the amount of funds sent back to families.

business@gleanerjm.com

Jamaican remittances

2001-2009

2001
US$968.0m
2002
US$1.229b
2003
US$1.426b
2004
US$1.497b
2005
US$1.651b
2006
US$1.770b
2007
US$1.975b
2008
US$2.033b
2009
US$1.798b

Source: IDB

Jamaica's share of remittances was reported at US$1.798 billion or 11.6 per cent lower than the US$2.03 billion of inflows in 2008, a peak year for inflows.