US$1-billion rise in Caribbean remittances eroded by inflation

Published: Friday October 10, 2008

According to the Inter-American Development Bank's (IDB) Multilateral Investment Fund (MIF), migrants from Latin America and the Caribbean will send home about US$1 billion more in 2008 than they did in 2007.

However, rising inflation across the globe has meant that this year's total will be worth 1.7 per cent less than the total sent in 2007, marking the first time this decade that remittances to Latin America and the Caribbean are expected to decrease in value.

Based on an analysis of recent remittance data, the MIF estimates that migrants will send some US$67.5 billion to their homelands in 2008 as opposed to the US$66.5 billion sent in 2007.

Due to the combined effects of economic downturns in the United States and Spain, inflation and a weaker dollar, this is the first time since the MIF started tracking these flows in the year 2000, that the value of the money sent home will decrease. Until last year, remittances to the region had grown by double digits every year.

These new estimates are based on monthly and quarterly data from nine Latin American central banks in countries that receive about 88.5 per cent of the remittances flowing to this region.

Notwithstanding this slowdown, the volume of remittances to Latin America and the Caribbean still outstrips all the overseas development aid and foreign direct investment in this region.

Remittances are and will continue to be a vital lifeline for millions of households. Previous MIF studies have highlighted how, throughout this decade, remittances have been more stable than other currency flows.

"People who are already abroad will adapt, looking for new jobs or cutting back on consumption in order to keep sending money home," said IDB President Luis Alberto Moreno

"Those thinking of migrating will probably opt for destinations where the economy is stronger and more jobs are available. Industrialized nations will continue to attract migrants but we expect to see an increase in remittances between developing countries, as more people move to places less affected by the global downturn."


Source: Jamaica Observer
http://www.jamaicaobserver.com/magazines/Business/html/20081009T210000-0500_141142_OBS_US___BILLION_RISE_IN_CARIBBEAN_REMITTANCES_ERODED_BY_INFLATION.asp