2006 Remittances to Mexico flat – housing downturn in U.S.?

According to the Migration Policy Institute, remittances to the U.S. were flat in 2006 compared to rapid growth in prior years. The report estimates that remittances were $24.5 billion. The report, like other I posted before, does not break out funds from the U.S., which must be the large majority. The housing turndown in the U.S., which began in 2006, may be the cause of the flat results.
The full report by MPI, available on the website, pinpoints the destination of funds by Mexican state. In a few states, over 10% of the state’s domestic product is remittance money.
The press release:
In “A First Look at the 2007 Slowdown in Remittances”, MPI reported that In 2006, Mexico received an estimated $24.5 billion in remittances — 11.3 percent of the total $276 billion in remittances worldwide. While migrant remittances to Mexico grew an average of 19.1 percent annually between 2003 and 2006, however, they increased by just 0.6 percent in the first half of 2007 compared to the first half of 2006.
A new MPI fact sheet provides a first look at changes in remittances to Mexico by state for 2003 to 2007, highlighting the states that may be most severely affected by a slowdown in money coming in from migrants abroad in the first six months, or semester, of 2007. The fact sheet, based on Bank of Mexico figures, shows
* Five Mexican states registered more than 5 percent growth in remittances in the first semester of 2007 compared to the first semester of 2006. They are Yucatan (17.8 percent), Guanajuato (12.1 percent), Puebla (9 percent), Baja California (7.9 percent), and Baja California del Sur (7.4 percent). In no case did the growth exceed the growth from January to June of 2006.
* Remittances fell by more than 5 percent in the first semester of 2007 in five states compared to the same period in 2006. They are the Distrito Federal (9.4 percent), Michoacán (6.8 percent), Chiapas (6.0 percent), the State of México (5.6 percent), and Chihuahua (5.2 percent).
* Of the remaining states, 17 had growth of less than 5 percent in remittances in the first semester of 2007 compared to the first semester of 2006 and five states had a decline of less than 5 percent.
* Four states accounted for more than a third of remittances in 2006 and 2007. The states of Michoacán, Guanajuato, Jalisco, and México accounted for more than a third of remittances to Mexico in 2006 and received 36.6 percent of remittances in the first half of 2007. The states receiving the smallest amounts in the first semester of 2006 and the first semester of 2007 included Baja California del Sur, Campeche, Quintana Roo, and Yucatán.
* Some states appear more dependent on remittances than others, the level of which can be seen by comparing a state’s share of remittances to its gross domestic product. Data show that the states of Michoacán, Guerrero, Zacatecas, Oaxaca, Nayarit, and Hidalgo displayed the highest levels of dependency in 2004, the latest year for which state-level GDP data are available. Baja California del Sur, Campeche and Quintana Roo appeared to be the least dependent on remittances due to comparatively low remittance inflows. Distrito Federal, Chihuahua and Nuevo León were less dependent due to comparatively high GDPs.
“While it is still unclear why remittance growth stalled in the first half of this year, if the slowdown continues through the remainder of 2007, it could have real implications for many Mexicans,” said Aaron Matteo Terrazas, an MPI researcher and author of the fact sheet. He continued, “We do know that money migrants send home is a lifeline for many communities, and local policymakers will need to evaluate what a slowdown in remittances might mean for their cities and states.”