For years, Mexicans have sent billions of U.S. dollars to their families back home. It is a social safety net in small towns. In fact, I recall a joke that two Mexican ladies were walking down the street and noticed that their neighbor had new windows. And then one said to the other that her son lived in “el norte”.
According to a Fox report, remittances to Mexico were U.S. $36 billion in 2019. In simple terms, that’s about 3% of their U.S. $1 trillion GDP. For the sake of comparison, Mexico receives about U.S. $25 billion from tourism and U.S. $22 billion in annual petroleum exports.
It must have been a bit frustrating for Mexico to read that unemployed migrants in the U.S. have no money to send. According to Erick Shneider, regional head for Latin America and the Caribbean with WorldRemit, they’ve noticed a drop. (Via The San Diego Union-Tribune)
How long does this last? It depends on how long the U.S. economy is down.
How will this hurt Mexico and other countries that depend on this monthly transfer? It will hurt a lot. At the same time, maybe the governments will finally come to terms with developing their own economies rather than depend on people abroad to “wire” cash.
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