Remittances to Latin America Decline as Global Economy Sours
Lazo, A.

The amount of money sent home to families in Latin American countries by relatives living abroad is projected to grow by its slowest rate on record this year, according to a report to be released by the Washington bank that tracks such transfers. A slowdown would not only potentially exacerbate poverty in home countries but is also an indication of the economic troubles facing Latin American immigrants in the United States and elsewhere, according to the Inter-American Development Bank (IADB).

The slowdown comes as inflation is rising in most Latin American countries and as the dollar is losing value against many local currencies. Adjusted for inflation and changes in the exchange rate, the bank projects that the money transfers will contribute 1.7 percent less to household incomes in Latin America than they did in 2007. "The money sent home in dollars isn't going as far as it used to go," said Robert Meins, a bank specialist in money transfers.

Development organizations and experts in microfinance have launched programs in recent years aimed at drawing these money transfers into the formal financial system, so immigrants and their families can establish credit histories and qualify for mortgages and small-business loans in the United States and abroad. Manuel Orozco, director of remittances and development at the Inter-American Dialogue, a Washington think tank, said development agencies should double down on efforts to encourage saving and investments in small businesses, as there will be less of a cushion if the economy further deteriorates and money transfers slow even more.

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