MexECON Blog

Remittances Start to Level Off

According to the central bank, Mexicans living abroad sent $10.6 billion back to Mexico during the first half of 2010.  The overall level of remittances was down 4.1% from the same period one year earlier.  The average remittance transaction was $317.41, down 3.3% year-over-year.  Figures for June alone showed an even smaller decline.  June remittances totaled $1.9 billion, down just 2.0% from one year earlier.  The average remittance in June was $321.09, up 0.1% from June 2009.

Comment:  Remittances are an important source of foreign exchange for Mexico, and the money that Mexicans living abroad send back to their families in Mexico helps buoy consumer demand.  During the "Great Recession," the decline in the U.S. economy meant that many Mexicans living north of the border saw their incomes seriously reduced, and that led to a painful decline in remittances.  Total remittances in 2009 were down a whopping 15.7% from 2008.  Now that the U.S. economy is growing and producing at least some new jobs again, remittances are leveling off.  That should help support the recent upward trend in the Mexican economy and put upward pressure on the peso.

Patrick Fearon, CFA
Vice President, Fund Management

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