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Recession hits remittances

Posted by CaribShout on September 11, 2009 at 9:30pm

A report commissioned by the BBC says as migrants have faced rising unemployment, remittance flows have slowed more broadly. The document by the UK-based Migration Policy Institute deals with the effects of the global economic crisis on migration and remittances. It points out that just as the economic crisis has taken an uneven toll across regions and countries, shifts in remittances have also varied by region and country. In the case of the Caribbean it says between 2000 and 2006, remittances grew but by 2007, slower growth had started to be recorded, largely reflecting the slowdown in the US construction industry. Where the money goes BBC Caribbean research has shown that in the region Guyana depends on money transfers from citizens abroad for 23.5 percent of its Gross Domestic Product (GDP). In the case of Haiti it’s 20 per cent, and Jamaica 19.4 percent. In terms of the values of remittances in Caricom – in 2008 the Jamaica economy benefited by just over US$2 billion dollars, Haiti 1.7 billion, Guyana 415 million and Trinidad and Tobago 130 million dollars rounded out the top four. Already for Jamaica, remittance inflows to the island are said to have already dropped close to 16 per cent since January this year. Jamaican remittances are estimated to come in at just over US$1.7 billion this year, about 300 million dollars less than last year. A recent report by the Inter-American Development Bank (IDB), projected that remittance flows to Latin America and the Caribbean will drop by about a tenth this year. (The actual figure was 11 per cent). It estimated that estimated a three-year low of US$62 billion in 2009. The bank also said that the decline in remittances could impact more than four million people in Latin America and the Caribbean. "We can expect some fall-off (in remittances) but not nearly as bad as the Dominican Republic or Mexico" said Richard Francis, Caribbean analyst at Standard and Poor's Another report, this one by the World Bank, suggested that "after registering a significant slowdown in the latter part of 2008, remittance flows are expected to decline modestly (this year) and recover in 2010. It also stated that "while it is true that the economic downturn in the United States has affected migrants (including those from the Caribbean) ... employers tend to place importance on migrants as lower cost and more flexible, and gtherefore were unwilling to fire them first in the face of slowing demand and declining revenues". Who’s sending How much money is sent home is largely determined by the skills and types of work of immigrant groups. Richard Francis, a Caribbean analyst at Standard and Poor's, a Wall Street ratings firm, recently suggested to BBC Caribbean that some regional countries could experience different levels of change due to this factor. In comparing Barbados and Jamaica he said a lot of the Bajan migrants “tend to be well-educated and go into fields such as nursing and teaching and one would expect those areas not to be as hard hit in the economic downturn." Still, he cautioned: "We can expect some fall-off (in remittances) but not nearly as bad as the Dominican Republic or Mexico, for example." Only the money moving While Caribbean migrants in the main global economies such as the United States, Britain and Canada continue to feel the pinch of the recession on those countries, there’s no evidence to suggest that many are contemplating returning home. Economic immigrants not likely to return (home) indicated a BBC-commissioned report. The BBC report by the Migration Policy Institute says the effects of the economic crisis on migration are complex and hard to predict. But it says that data from around the world cast serious doubt on the notion that the recession has led to massive return migration. It explains that return migration often depends more on “a complex interplay of the economic, social, and political conditions in migrant-source countries than simply on job prospects in countries of destination”. “It stands to reason, it adds. “ that economic immigrants will not be likely to return to their country of origin in large numbers if they have worse economic prospects at home.”

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