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Expect decline in remittances for 2009
MADISON, Wis. (5/21/09)--Remittances to the Carribean and Latin America will likely decline in 2009 for the first time in nearly a decade, a trend that will impact credit unions, says the World Council of Credit Unions (WOCCU). The Inter-American Development Bank, based in Washington. D.C., started tracking international remittances in 2000, and said this is the first year they will decrease. The bank noted the amount of money sent to the region started to decline late last year (Miami Business Review May 20). “Because our recession has been a sharp and painful one, there’s been a sizeable loss of jobs” that have impacted business sectors that rely on migrant labor such as construction and tourism, Manuel Lasaga, economist and president of Miami-based Stratinfo, told the Review. Another reason for the drop is that remittances and migrant labor have grown substantially worldwide and are more sensitive to the global economy’s cyclical swings, Lasaga added. Remittance activities through IRNet, the remittance service offered by WOCCU Services Group, WOCCU’s for-profit subsidiary, are showing some consistencies with national trends, depending on the country in question and the competitive situation within each country, WOCCU told News Now. Currently, 109 U.S. credit unions participate in IRNet and send remittances to credit unions in eight countries. Since the service was established in 2001, IRNet has supported 148,000 transactions valued at $80 million. “The IRNet program has seen a slight downturn over the past four years, with Bolivia, Guatemala, Mexico and Nicaragua following the national trends in declining remittances, according to first-quarter 2009 statistics,” WOCCU said. “However, during that same period, remittances to El Salvador have remained constant, while there have been increases in remittances to Ecuador and Kenya. Peru, which entered the program this year, also has seen growth during the first quarter.” Roughly $283 billion in remittances were sent to countries worldwide in 2008, with $67.5 billion sent to Latin America alone, WOCCU added. “The global economic downturn has found many Latin American workers returning to their home countries due to lack of available work in host countries, causing significant declines in remittance activities,” WOCCU said.
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