Mexico’s reeling economy received another jolt of bad news Monday with reports of the largest monthly decline yet in the amount of money Mexicans working abroad send home.
Remittances for the month of April totaled about $1.7 billion, 18.6% less than the $2.1 billion recorded in April 2008, Mexico’s central bank said.
After oil, remittances are Mexico’s largest source of income, and their decline is certain to further erode the country’s economic growth. Experts cite several reasons for the drop in money sent home by the estimated 12 million Mexicans living in the U.S., including recession in the U.S. and widening unemployment among migrant workers. In addition, tighter security at the nations’ shared border has deterred some Mexicans from heading north in search of increasingly scarce jobs.
Last year was the first time remittances declined overall for a 12-month period, after steady growth ever since authorities began keeping records 13 years ago.
The Finance Ministry recently announced that Mexico had experienced its sharpest first-quarter shrinkage in economic activity since the mid-1990s, when the currency collapsed and the country plunged into depression as part of the Tequila Crisis.
And the downturn was registered even before Mexico endured the economic havoc wrought by swine flu. To contain the disease, the government ordered the closure of schools, restaurants and most cultural venues.
Mexico lost at least $2 billion as a result, the Finance Ministry says. And some losses are still being tabulated: Hardest hit was Mexico’s third-largest source of income, tourism.
Hotel occupancy in late April and early May was down by as much as 90% in some areas, said Tourism Minister Rodolfo Elizondo, who predicted losses for the year of up to $4 billion in that sector alone.
Mexico may have dodged one bullet: General Motors, which employs 13,000 people at four plants in Mexico, said its operations here will not be affected by its declaration of bankruptcy in the U.S.