WASHINGTON D.C, November 8, 2010 - Remittance flows, the lifeline of many Latin American economies, are ticking back up in 2010 after a steep 12 percent decline in 2009, said the World Bank today.
The Outlook for Remittance Flows 2011-12 states that remittances are expected to grow by 2 percent in 2010 reflecting a modest but steady recovery in the United States and a continuing pattern of resilience to the effects of the global economic crisis of 2008-2009.
Beyond 2010, medium-term prospects improve significantly for the Latin American & Caribbean region (LAC) with a growth pace of 7.6 percent in 2011 and 10 percent in 2012 to reach $69 billion in total remittances, according to the report.
Mexico confirmed its top position as remittance destination in LAC with an estimated $22.6 billion received in 2010, while claiming the third spot globally after India and China. Other top recipients include: Brazil ($4.3 billion), Guatemala ($4.3 billion), Colombia ($3.9 billion), El Salvador ($3.6 billion), Honduras ($2.7 billion and Dominican Republic with ($3.4 billion). Remittance flows have a larger imprint on Central American and Caribbean economies where they contribute between 10-20 percent of GDP. Honduras leads the pack with 19.3 percent of GDP followed by Guyana with 17.3 percent and El Salvador with 15.7 percent, the study said..
“This is good news, especially when taken together with other good news such as growth in trade and direct foreign investment, which together have contributed to a positive growth rate in the region’s economies,” said World Bank senior economist Humberto Lopez.
Lopez warned that persistent unemployment, volatile currencies and anti-immigrant sentiments in high-income countries could put the brakes on remittances flows but, for the moment, there's an upwards tendency south of the US border.
Recovery in the US housing sector, a large employer of Mexican immigrants, in the first half of 2010 was accompanied by growth in remittances to Mexico, the report notes. National and sector level employment data for the US tell a similar story of a recovery in migrant employment in the first half of 2010, particularly in hospitality, construction, and wholesale and retail trade.
Remittance flows will remain resilient and contribute to upwards trends to high-income destinations, especially OECD countries, on account of a positive net migration flow, despite a significant drop in many migrant corridors due to the crisis.
Outlook for Remittance Flows 2011-12 notes that the region's top migration corridors include Mexico–US (accounting for 11.6 million migrants in 2010), El Salvador–US, Guatemala–US and Colombia-US. In the Caribbean top corridors include: Dominican Republic–US, Jamaica–US and Haiti-US. The region's total stock of immigrants is 6.6 million or 1.1 percent of population (compared to 215.8 million or 3.2 percent for the world).
Globally, officially recorded remittance flows to developing countries are estimated to increase by 6 percent to $325 billion in 2010. This marks a healthy recovery from a 5.5 percent decline registered in 2009. Remittance flows are expected to increase by 6.2 percent in 2011 and 8.1 percent in 2012, to reach $374 billion by 2012.