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LATIN AMERICA / THE CARIBBEAN
Declining purchasing power undermines remittances
3/25/2011
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Stronger local currencies and inflation hit families back home.

Remittances into Latin America and the Caribbean may have increased last year by US$100 million compared with 2009 to $58.9 billion, but stronger local currencies and inflation reduced recipients´ purchasing power, according to an Inter-American Development Bank report published March 14.

“Expressed in local currencies and adjusted for inflation, remittances to Latin America and the Caribbean were 8.7 percent lower in 2010 than in 2009,” said the report, entitled, “Remittances to Latin America and the Caribbean in 2010: Stabilization After the Crisis.” Money transfers to this region were worth 4.4 percent less than in 2009 due to currency fluctuations, particularly the weak US dollar.

“Remittances remain a vital source of income for millions of families in the region who depend on these flows to cover the cost of basic needs such as clothing, medicine or food,” it said. “For many of these recipient families, 2010 was a year of increased economic vulnerability, since with stronger local currency values and rising inflation, the remittances they received did not reach the same value of the previous year.”
Remittances to the region had fallen in 2009 amid the international financial crisis, which left thousands of migrant workers and immigrants living in the United States and Europe unemployed.
The report said remittances in 2009 had fallen 15 percent compared with 2008, when they reached a record $69.2 billion.

While remittances started to stabilize in 2010, there were marked differences between subregions, the report said. Remittances to Central America increased just over 3 percent as employment grew in the United States, where the vast majority of Central American emigrants move. In Andean countries, however, they fell just over 4 percent since employment has largely not recovered in Europe, where most migrants from that area live.

Remittances to Haiti increased by 20 percent, mostly because of the January 2010 earthquake. Brazil saw a 15 percent-drop in its remittances, as its strong economy lured some migrants back home, the bank said.
—Latinamerica Press.

LATIN AMERICA/CARIBBEAN
Remittances (in US$ millions)

Country
2009
2010
Mexico
21,123
21,271
Guatemala
3,912
4,127
Brazil
4,746
4,044
Colombia
4,134
4,023
El Salvador
3,465
3,540
Dominican Rep.
2,790
2,908
Peru
2,665
2,534
Honduras
2,483
2,529
Ecuador
2,495
2,324
Haiti
1,641
1,971
Jamaica
1,798
1,911
Nicaragua
915
966
Bolivia
1,023
964
Argentina
853
886
Chile
756
820
Venezuela
733
756
Paraguay
691
723
Costa Rica
535
509
Guyana
356
374
Panama
291
297
Trinidad & Tobago
116
123
Uruguay
116
120
Suriname
103
109
Belize
100
100

Source: IADB


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