MercoPress. South Atlantic News Agency

Mexican migrant remittances fall for first time on record

Mexican migrant remittances fell in 2008 for the first time on record, Mexico's central bank said Tuesday. Remittances are Mexico's second-largest source of foreign income after oil and they plunged 3.6% to 25 billion US dollars in 2008 compared to 26 billion for the previous year.

The percentage drop is nearly twice what the government had expected for the year, and central bank official Jesus Cervantes said the decline will likely continue this year. Experts blame a crackdown on illegal immigration that has stemmed the flow of those heading north to seek work as well as the US recession, in which many Mexicans, especially construction workers, have been laid off. It was the first time remittances have fallen year-to-year since the bank starting tracking the money 13 years ago. Remittances have been falling across Latin America as the U.S. sheds jobs, slowing growth in many nations, according to the Inter-American Development Bank. "Remittances are the single strongest poverty-reduction tool that many countries have," said Robert Meins of the Inter-American Development Bank. "This could translate into a great deal of hardship for a lot of people, which I think is underappreciated." In Mexico, reduced remittances are combining with a slide in exports to slow the economy, which the central bank Tuesday predicted will contract between 0.8% and 1.8% in 2009. Mexico sends 80% of its exports to the US. Mexico receives the largest amount of remittances in Latin America and the third largest in the world, after India and China â€" where remittances have only slowed, but not dropped because they have many skilled professionals working abroad. While remittances represent less than 4% of GDP, their decline is being felt in towns across Mexico, where lines at Western Union counters have all but disappeared. New businesses funded by migrant money are no longer opening and construction has stopped on homes that have been built in stages as cash arrived from those working abroad. In the first part of the decade, Mexico's recorded payments grew rapidly, from 9 billion in 2001 to 26 billion in 2007, because of swelling migration and better reporting methods.