Latin America & Caribbean
Remittances to developing countries decreased by 2.4 percent to an estimated $429 billion in 2016. This is the second consecutive year that remittances have declined. Such a trend has not been seen in the last 30 years. Even during the global financial crisis, remittances contracted only during 2009, bouncing back in the following year.
While we know a lot about the impact of remittances on growth, investment, poverty, inequality, health, and education, the potential effects of international remittances on the domestic financial system and financial inclusion have not received much attention. There are several ways in which remittances could affect financial inclusion (that is, facilitating households’ access to and use of financial services). First, remittances might increase the demand for savings instruments. The fixed costs of sending remittances make the flows lumpy, providing households with excess cash for some period of time. This might potentially increase their demands for deposit accounts, since financial institutions offer households a safe place to store this temporary excess cash. Second, remittances might increase household’s likelihood of obtaining a loan. Processing remittances flows provides financial institutions with information on the income of recipient households. This information might make financial institutions more willing and able to extend loans to otherwise opaque borrowers. On the other hand, since remittances might help relax households’ financing constraints, the demand for credit might fall as remittances increase.
Migration flows in both directions between the United States and Mexico have diminished according to recent statistics released by the Mexican and United States governments.
Mexican immigration to the United States began to decline in the mid-2006, and that pattern has continued into 2010. The Pew Hispanic Center analysis of Mexican government data indicates that the number of Mexicans annually leaving Mexico for the U.S. declined from more than one million in 2006 to 404,000 in 2010. Rand Corporation also found that the Mexican immigrants returning to Mexico have not increased despite the crisis.