Every end of the month, millions of Mexicans go to their banks and Western Union branches in Mexico City, Oaxaca and Puebla to withdraw the money sent to them by their relatives in the U.S. Reaching around $20 billion annually, remittances are a core part of Mexico’s economy -- and for many people, the key income, the basis of their existence.
Remittances in Latin America are expected to add up to $61 billion this year. A little over a third -- $22 billion -- will go to Mexico, making it the largest recipient in Latin America and fourth in the world, as explained in a new report by the World Bank.
The institution predicted that remittances in Latin America would go up 2.5 percent in comparison to 2012. And the growth trend will continue, reaching $75 billion in 2014, and $84 billion in 2015.
But in Mexico, the report predicts, 2013 will see no increase from last year’s remittances. Analysts at the World Bank attribute this to the slow recovery of the U.S. economy and the decrease of Mexican immigration to the U.S.
Mexican analysts also point to the exchange rate and new restrictions on remittances. The U.S. hardened its requirements and raised fees for sending money abroad in order to combat money laundering, and that has resulted in many expatriate Mexicans sending out smaller amounts.
According to El Economista Mexico, 10 percent of Mexican-born citizens live abroad. Of those, 98 percent reside in the U.S. Exact numbers are hard to establish, given the large group of undocumented immigrants, but the Mexican government estimates that 33 million Mexicans live in the U.S., including people who are second- and third-generation. Of the estimated 11 million undocumented immigrants in the U.S., 52 percent are Mexicans.
The report calculates that 26 million Latin Americans live and work abroad, and most of them send remittances home. In El Salvador, remittances make up 17 percent of the economy. And 70 percent of Dominicans have a relative living abroad, with 40 percent receiving remittances.
In total, worldwide remittances are expected to grow 6.3 percent in 2013, reaching $414 billion. The largest recipients are India ($71 billion), China ($60 billion) and the Philippines ($26 billion), followed by Mexico. It is expected that, as the global economy grows, remittances will continue to increase, with an estimated total of $540 billion by 2016.
Patricia covers Latin America for the International Business Times.
Before joining IBT in March 2013, she worked at BBC America in New York, La República in Lima...