July 5, 2007
Commerce and Immigration News
In the past decade, remittances from migrant workers in the United States emerged as one of the pillars of the Mexican economy. From north to south, entire communities became dependent on the flow of money from relatives laboring away in El Norte. Current trends, however, suggest that the remittance boom could have hit a peak. Recent statistics from the official Bank of Mexico (Banixco) report a slowdown in remittances entering the country.
The central bank reported that $7.3 billion was received during the first four months of 2007, an amount that represents a drop in comparison to 2006’s remittance total that reached an estimated $25 billion. What’s more, Banixco disclosed that remittances registered a drop this year of approximately $13.5 million from March to April.
Some analysts attribute the dollar downturn to changes in the pattern of migration. Rodolfo Rubio Salas, a researcher with the Colegio de la Frontera Norte, told a Ciudad Juarez reporter that more family members of migrant workers in the US are joining their relatives north of the border.
“There has been a process of family reunification in recent years,” Rubio said, “and this means that migrants don’t have to send money to their families in Mexico.”
Mexico is likely to witness significant economic and political consequences if migrant remittances continue on a downward spiral. According to Chihuahua economist Ruben Borunda, small retail businesses represent one sector of the economy that could be hurt by further decreases in remittances. A study by the lower house of the Mexican Congress reported that almost all remittance monies are spent on personal necessities, with less than two percent invested in productive activities.
Politically, remittances have surfaced as a point of contention in the debate over the Calderon administration’s proposed tax reform, which includes a proposal to slap a two percent tax on bank deposits. Edmundo Ramirez Martin, a federal congressman from the opposition Institutional Revolutionary Party (PRI) recently warned that taxing bank accounts could have an adverse effect on the migrant-fueled economy. Congressman Ramirez contended that 25 percent of remittances arrive in the heavy spending and traveling month of December.
“(Remittances) are not made by electronic transfers but are personally deposited in bank accounts in Mexico by the migrants and their families,” the federal representative added.
From 2002 to 2006, remittances registered in Mexico leaped from $9.8 billion to nearly $25 billion. As a source of foreign exchange for Mexico, remittances are only surpassed by oil exports and overshadow revenues from direct foreign investment and tourism. Some accounts now report that Mexico is the biggest receptor of remittances in the world, even ahead of India and China.
Sources: El Diario de Juarez, July 4, 2007. Article by
Aracely Castanon. El Sol del Centro, June 27, 2007. La
Jornada, June 15 and 23, 2007. Articles by Roberto
Gonzalez Amador and the Notimex news agency.
Frontera NorteSur (FNS): on-line, U.S.-Mexico border news
Center for Latin American and Border Studies
New Mexico State University
Las Cruces, New Mexico
Tags: Mexico, Oaxaca