Mexicans sent back $25 billion, down from $26 billion the year before. Bank officials say this means that the country will follow the US into recession.
From the Christian Science Monitor, Sara Miller Llana fills us in on how that effects the economy and people in poverty in Mexico.
But the break in the trend is significant, say economists. Less cash coming to low-income families who then spend it on goods and services, will mean more frugal spending, which will in turn be a further drag on the Mexican economy this year. And it will impact millions of families whose entire incomes depend on the dollars sent from men and women working as construction workers, lettuce pickers, and housekeepers from California to New York.
"This translates into social pressure," says Heliodoro Gil Corona, an economist at the School of Economists in the Mexican state of Michoacán. "It means a lack of employment. It means a lack of income. It even means more crime and insecurity."
Mexico's economy is in much better shape than in previous global economic downturns. While GDP is expected to remain stagnant or shrink here this year, in the past, when the US was in a recession, the economy south of the border quickly followed.
Even though Mexico sends up to 80 percent of its exports to the US and Canada, it has been cushioned somewhat by having corrected macroeconomic imbalances, such a fiscal deficit, external deficit, and high inflation, says Alfredo Coutino, a senior economist for Latin America at Moody's Economy.com.
But a drop in remittances, which represent the largest source of foreign income in Mexico after oil exports, is a worrisome trend – one that economists expect will trend further downward this year.
The poorest Mexicans are not the most affected – those in extreme poverty do not tend to be economic migrants. Rather the decline in remittances touches those families another rung up the economic ladder, those who depend on money to build better homes, buy books for their children and medicine for their elders.