The Real Scoop on Remittances During the Recession

By Guest Columnist Jan 29, 2009

By Francis Calpotura Founder & Director, Transnational Institute for Grassroots Research and Action (TIGRA) WHO IS HURTING WITH THE DOWNTURN? There’s been many articles recently about the impact of the economic crisis on the amount of money that our families send back home. Here’s the real scoop: 1. There has been a slowdown in level of remittances in 2008, but not as much as everyone seems to claim. • Remittances to the global South ("developing countries") is $283 billion in 2008 compared to $265 billion in 2007, an increase of 7%. The World Bank is predicting a decrease of 0.9% in 2009, but will increase again by 6% in 2010. • Overall, there is a 1.5% increase for Latin America & the Caribbean in 2008 totaling $67.5 billion. The most affected in the region are Mexico (decrease of 2% in 2008, and Ecuador about 7%). But the rest of Latin America experienced an increase in 2008, but not as big as previous years. • Remittances are slowing but still is very robust outside of Latin America, with increases in Kenya (11%), Philippines (18%), Pakistan (18%), and Bangladesh (36%). 2. There are several reasons for the resilience of remittance flows during economic downturns. • Remittances are sent by the cumulated flows of migrants over the years, not only by the new migrants of the last year or two. This makes it persistent over a longer period of time. If migration stops over a course of a decade or so, remittances then will stop growing. That’s not the case with people leaving their countries as a result of neoliberal globalization. • Remittances are a relatively small part of migrants’ incomes (10-30% in most cases), so they can continue to send even when hit by economic shock due to savings, etc. • Remittances are economic responsibilities of migrants to their families and will not cease even under extreme economic duress. HOWEVER, WE CANNOT OVERLOOK THE FACT THAT (IM)MIGRANTS ARE ONE OF THE MOST HARDEST HIT BY THE ECONOMIC DOWNTURN. BUT WHO’S NOT HURTING? 3. Western Union enjoyed another banner year of profit during 2008; WU’s revenues increased by 10% from 2007, making almost $5.4 billion dollars. The second largest remittance company, MoneyGram International, enjoyed an 18% increase in profit in 2008 over the previous year. Both are projecting higher profits again in 2009, EVENTHOUGH EVERYONE’S PREDICTING A DROP IN OVERALL REMITTANCES WORLDWIDE. Once again, these companies are making obscene profits at a time of economic pain for families worldwide. So, the next time you see another article in your local paper about the impact of the economic crisis on remittances, use these data to write an op-ed that asks companies like Western Union and MoneyGram International to do their share in this economically-challenging times to lower their prices and reinvest in communities. For more information, check out Transnational Institute for Grassroots Research and Action (TIGRA)