money cutting short

Holland, MI -- The money sent home by Mexican migrants fell in 2008 for the first time on record, Mexico’s central bank said Tuesday, Jan. 27 — part of a global trend that could worsen as emigrants from developing countries lose jobs in the global financial crisis.

Many migrants living in the U.S. are trying to make ends meet, making it difficult to send money back to families in Mexico, said Lu Reyes, Lakeshore Latino Outreach Center volunteer and social worker.

“I don’t care how much you want to help, you have to take care of your own here — pay rent, buy food, the basics,” she said.

Reyes said people might be saving money until the economy improves.

Remittances, Mexico’s second-largest source of foreign income after oil, plunged 3.6 percent to $25 billion in 2008 compared to $26 billion for the previous year, the central bank said.

The percentage drop is nearly twice what the government had expected for the year, and central bank official Jesus Cervantes said the decline will likely continue this year.

Experts blame a crackdown on illegal immigration that has stemmed the flow of those heading north to seek work as well as the U.S. recession, in which many Mexicans, especially construction workers, have been laid off.

People have been leaving the country over the past few years, possibly contributing to less money headed back to Mexico, said Bert Jara, Latin Americans United for Progress executive director.

It was the first time remittances have fallen year-to-year since the bank started tracking the money 13 years ago.

Mexico is not alone: After several years of strong growth, remittance flows to developing countries around the world slowed in the third quarter of 2008. They are expected to drop even further this year in response to the global crisis, World Bank economist Dilip Ratha said Tuesday.

Global remittances that likely hit $283 billion in 2008 are expected to drop 0.9 percent in 2009, Ratha said. Remittances from some Arab countries could drop by 13 percent, he said.

“Remittances are the single strongest poverty-reduction tool that many countries have,” said Robert Meins of the Inter-American Development Bank. “This could translate into a great deal of hardship for a lot of people, which I think is underappreciated.”

In Mexico, reduced remittances are combining with a slide in exports to slow the economy, which is expected to stagnate or even contract this year. Mexico sends 80 percent of its exports to the United States.

“It’s definitely another sign that Mexico is receiving a shock from the U.S. recession through its trade ties to it, and we expect the economy to be in recession this year,” said Jimena Zuniga, an economist at Barclay’s Capital in New York.

Mexico receives the largest amount of remittances in Latin America and the third largest in the world, after India and China — where remittances have only slowed, but not dropped because they have many skilled professionals working abroad who haven’t been hit as hard, Ratha said.

— Staff writer Roel Garcia contributed to this article.

Background - my mom worked with this Lu Reyes