The Inter-American Development Bank reports that remittances to Latin America went up 6% in 2011, to $61 billion. After a slowdown when the recession hit, remittances are back on track. Despite media reports, it is clear that there was no exodus back to Latin America. People waited things out, then started sending when they were once again able.
Two intriguing points, both of them positive:
First, despite the recession, Latin American migrants seem to be doing better in the United States.
Most of the money continued to be sent from traditional host countries such as the United States and Western Europe. In the United States, source of about three-quarters of remittances to Latin America and the Caribbean, foreign workers saw improving employment and wage levels. As a consequence, migrants made more transfers for higher amounts than the previous year.
Second, economies in Latin America are doing better so remittances represent a smaller slice of the economy. Of course, this will only last so long.
In recent years, as regional economies improved, remittances have become a smaller share of gross domestic product. In several countries, however, remittances are still more than 10 percent of GDP.
Overall, remittances are here to stay. Harnessing them to foster further economic growth is the key challenge.