Foreign Policy Blogs

Remittance recession?

The Washington Post is reporting that remittance payments from US resident immigrants to Latin American countries has slowed down over the past two months. While remittances are subject to cyclical economics, much like any other payments, analysts are speculating whether this could signal a more profound shift:

“Many remittance-rich nations would fall into a recession if immigrants began sending home significantly less money, which could encourage more poor Latin Americans to find work in the United States, according to the study and Donald Terry, manager of the Multilateral Investment Fund at the Inter-American Development Bank.”

The article highlights the important role that remittances play in Central American economies, such as Honduras and El Salvador, where they constitute 18 percent of the national income and surpass foreign aid and investment, according to a study by the think tank, Inter-American Dialogue.

The Inter-American Development Bank is studying possible reasons for sluggish payments, noting that anecdotal evidence suggests that raids on migrant communities by U.S. law enforcement officers and fear of deportation has prompted some to curb spending. Other reasons may be saving money to pay U.S. citizenship fees, wagering that a congressional debate over immigration law would result in allowing them to pay a penalty and legalize their immigration status. A downturn in the U.S. housing industry could also be trickling down to immigrants, who fill the majority of U.S. construction jobs.”

For further reading on the role of remittances in aiding developing countries, please take a look at these documents:

 

Author

Cathryn Cluver

Cathryn Cluver is a journalist and EU analyst. Now based in Hamburg, Germany, she previously worked at the European Policy Centre in Brussels, Belgium, where she was Deputy Editor of the EU policy journal, Challenge Europe. Prior to that, she was a producer with CNN-International in Atlanta and London. Cathryn graduated from the London School of Economics with a Master's Degree in European Studies and holds a BA with honors from Brown University in International Relations.

Areas of Focus:
Refugees; Immigration; Europe

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