Yearly Mexican remittances drop for 1st time

The money sent home by Mexican migrants fell in 2008 for the first time on record, Mexico’s central bank said Tuesday – part of a global trend that could worsen as emigrants from developing countries lose jobs in the global financial crisis.

Remittances, Mexico’s second-largest source of foreign income after oil, plunged 3.6 percent to $25 billion in 2008 compared to $26 billion for the previous year, the central bank said.

The percentage drop is nearly twice what the government had expected for the year, and central bank official Jesus Cervantes said the decline will likely continue this year.

Experts blame a crackdown on illegal immigration that has stemmed the flow of those heading north to seek work as well as the U.S. recession, in which many Mexicans, especially construction workers, have been laid off.

Mexico is not alone: After several years of strong growth, remittance flows to developing countries around the world slowed in the third quarter of 2008.

They are expected to drop even further this year in response to the global crisis, World Bank economist Dilip Ratha said Tuesday.

Global remittances that likely hit $283 billion in 2008 are expected to drop 0.9 percent in 2009, Ratha said. Remittances from some Arab countries could drop by 13 percent, he said.

“Remittances are the single strongest poverty-reduction tool that many countries have,” said Robert Meins of the Inter-American Development Bank. “This could translate into a great deal of hardship for a lot of people, which I think is underappreciated.”