An entire industry thrives on US money in Mexico and it is not drugs.
Remittances from US to Mexico drop 14%
By Ronald Buchanan in Mexico City
Financial Times
January 4 2010 21:18
The remittances that Mexican emigrants sent home to their families from a recession-bound US dropped by 14 per cent year-on-year in November to $1.5bn, the Bank of Mexico reported on Monday.
Remittances for the first 11 months of 2009 totalled $19.6bn, a decline of 16 per cent on the same period of the previous year, the central bank said.
Most of Mexico’s emigrants are based in the US. Their remittances are exceeded only by oil exports as the hard-pressed Mexican economy’s official leading source of dollar earnings, although official statistics give no estimate of the earnings of the nation’s powerful drug cartels.
Mexico’s close trade ties to the US have been blamed by Felipe Calderón, president, and international financial institutions for an expected fall of almost 7 per cent in its gross domestic product in 2009, the worst performance in Latin America, and worse than what followed Mexico’s 1994-95 financial collapse.
November’s fall in remittances was the smallest in eight months, probably reflecting a moderate recovery in the US jobs market. The impact will have been eased for Mexicans receiving money by the fall in the Mexican peso’s value against the dollar.
Last year, the government’s finances remained sound, largely thanks to its ability to dip into rainy-day funds, but a 2010 austerity budget raised fears of a long haul out of recession.
The government has rejected criticism it is not doing enough to stimulate growth. At the weekend, José Antonio Meade, a deputy finance minister, said investment in programmes to regenerate jobs and boost public works amounted to 1.8 per cent of gross domestic product in 2009, “a sum that is comparable with the stimuli implemented in other industrialised and emerging countries”.
For consumers, the uphill slog of January will be steep this year, with rises in the price of everything from cable television to beer, as well as petrol, electricity and food staples such as tortillas and bread.
But the investment community remains upbeat amid predictions of 3.5 per cent economic growth in 2010 and 2009’s increase of 44 per cent in the Mexican stock market index.
Confidence was bolstered last year when Mr Calderón appointed the respected finance minister, Agustín Carstens, to succeed Guillermo Ortiz as governor of the Bank of Mexico.
Ernesto Cordero, who took over from Mr Carstens at the ministry, is more of an unknown quantity, but he has tried to quell fears of big changes.
Mexico
Posts
