Slow Down in Migrant Remittances From The US to Mexico

The FT earlier this week:

US migrant laws hit cash sent to Mexico

By Richard Lapper in São Paulo

Published: August 8 2007 22:37 | Last updated: August 8 2007 22:37

Legal restrictions targeting illegal immigrants have contributed to a sharp fall-off in the remittances sent to Mexico from a number of US states, according to a survey published on Wednesday.

The survey, commissioned by the Inter-American Development Bank, shows that Mexicans living in southern and other US states without a strong tradition of Latin American immigration – such as Louisiana, North Carolina and Georgia – are feeling uneasy about the future.

These states have also seen a recent surge in legislation increasing penalties for those who employ illegals and making it more difficult for migrants to obtain driving licences and other documentation, for example.

Only about half the almost 2m Mexicans in these so-called “new” migration states are sending back remittances, compared with four-fifths a year ago. That is the biggest single factor explaining a levelling-off in remittance growth to Mexico following several years of double digit growth, according to the report.

“The environment is becoming much more hostile in these new states,” said Don Terry, head of the multilateral investment facility, which leads the IADB’s work on remittances.

The research singled out the southern state of Georgia as “the epicentre” of the new trend. “It is logical that if you feel you are not welcome and are going some place else you start to save a little kitty to deal with emergencies. In addition, in these states it is not so easy to get a job or to secure an increase in wages,” said Sergio Bendixen, a pollster who conducted the research.

Mexico received $23.1bn (€16.8bn, £11.4bn) in remittance income in 2006, with the flows helping to boost substantially the income of poor families. However, the rate of increase has begun unexpectedly to tail off this year. Figures from the Mexican Central Bank show remittances grew by only about 0.6 per cent in the first six months of 2007 compared with a rise of 23 per cent a year previously.

“Immigrants feel they are suffering from discrimination and lack of respect,” said Mr Bendixen, whose research was based on focus group interviews with Mexican and Central American migrants. “They are unable to rent homes and in some cities it is becoming more and more difficult to find a job.”

The survey shows a slightly different picture emerging in 10 states such as New York, California and Florida where there has traditionally been a strong Hispanic presence and where the Mexican, Central American and other Latin American communities are well organised.

About two-thirds of the estimated 8.4m Mexicans who live in these states have continued to send remittances this year.

Remittances from Guatemalan, El Salvadorian and Honduran migrants, who tend to be concentrated in these traditional areas, rose by 11 per cent in the first six month of this year from just under $4.5bn to almost $5bn.