Baja Bernie
`Normal` Nomad Correspondent
Posts: 2962
Registered: 8-31-2003
Location: Sunset Beach
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Mood: Just dancing through life
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Un-intended Consequences
July 5, 2007
Commerce and Immigration News
End of the Remittance Bonanza?
In the past decade, remittances from migrant workers in
the United States emerged as one of the pillars of the
Mexican economy. From north to south, entire communities
became dependent on the flow of money from relatives
laboring away in El Norte. Current trends, however,
suggest that the remittance boom could have hit a peak.
Recent statistics from the official Bank of Mexico
(Banixco) report a slowdown in remittances entering the
country.
The central bank reported that $7.3 billion was received
during the first four months of 2007, an amount that
represents a drop in comparison to 2006's remittance total
that reached an estimated $25 billion. What's more,
Banixco disclosed that remittances registered a drop this
year of approximately $13.5 million from March to April.
Some analysts attribute the dollar downturn to changes in
the pattern of migration. Rodolfo Rubio Salas, a
researcher with the Colegio de la Frontera Norte, told a
Ciudad Juarez reporter that more family members of migrant
workers in the US are joining their relatives north of the
border.
"There has been a process of family reunification in
recent years," Rubio said, "and this means that migrants
don't have to send money to their families in Mexico."
Mexico is likely to witness significant economic and
political consequences if migrant remittances continue on
a downward spiral. According to Chihuahua economist Ruben
Borunda, small retail businesses represent one sector of
the economy that could be hurt by further decreases in
remittances. A study by the lower house of the Mexican
Congress reported that almost all remittance monies are
spent on personal necessities, with less than two percent
invested in productive activities.
Politically, remittances have surfaced as a point of
contention in the debate over the Calderon
administration's proposed tax reform, which includes a
proposal to slap a two percent tax on bank deposits.
Edmundo Ramirez Martin, a federal congressman from the
opposition Institutional Revolutionary Party (PRI)
recently warned that taxing bank accounts could have an
adverse effect on the migrant-fueled economy. Congressman
Ramirez contended that 25 percent of remittances arrive in
the heavy spending and traveling month of December.
"(Remittances) are not made by electronic transfers but
are personally deposited in bank accounts in Mexico by the
migrants and their families," the federal representative
added.
>From 2002 to 2006, remittances registered in Mexico leaped
from $9.8 billion to nearly $25 billion. As a source of
foreign exchange for Mexico, remittances are only
surpassed by oil exports and overshadow revenues from
direct foreign investment and tourism. Some accounts now
report that Mexico is the biggest receptor of remittances
in the world, even ahead of India and China.
Sources: El Diario de Juarez, July 4, 2007. Article by
Aracely Castanon. El Sol del Centro, June 27, 2007. La
Jornada, June 15 and 23, 2007. Articles by Roberto
Gonzalez Amador and the Notimex news agency.
Frontera NorteSur (FNS): on-line, U.S.-Mexico border news
Center for Latin American and Border Studies
New Mexico State University
Las Cruces, New Mexico
My smidgen of a claim to fame is that I have had so many really good friends. By Bernie Swaim December 2007
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Osprey
Ultra Nomad
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Registered: 5-23-2004
Location: Baja Ca. Sur
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As I understand it, foreign remittances includes the bank deposits sent from the states to expats who live in Mexico and other U.S. citizens who send
money down.
Earlier news reports blame the Mexican worker's remittance shortage now on the U.S. housing slump; tens of thousands of Mexican construction workers
all over the U.S. find themselves out of work with no funds to send home. I think it's all "slow news day" stuff -- none of it is meaningful because
none of it can be verified, quantified or used against other important statistics that are gathered by those without reasons to skew the numbers.
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805gregg
Super Nomad
Posts: 1344
Registered: 5-21-2006
Location: Ojai, Ca
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It's a slowdown in construction, I'm a roofing contractor, my remitance to me has slowed down too.
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Bajalero
Nomad
Posts: 316
Registered: 11-24-2003
Location: todos santos/ rcho san diego
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No hay mandado esta mez
Por la gasolina
Por la leche
Por toda esta mas alto ..
One has to contemplate the argument that Mexico has an underhanded support of illegal immigration.
What I don't understand is why would Mexico really support any amnesty given the dollars will dry up once the migrants become citizens of the US and
bring their families north
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CaboRon
Ultra Nomad
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Registered: 3-24-2007
Location: The Valley of the Moon
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Mood: Peacefull
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Deposit Tax
A two percent tax on bank deposits ? I can't think of a better way to drive the banking system into the ground. Many will simply go back to a
completely cash society. And considering that most transactions are in cash already it should familier territory for most. So, the banking system
will become closed to any but those who can afford to throw away two percent of their wealth. Just don't see how this could be good economically.
 CaboRon
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wilderone
Ultra Nomad
Posts: 3881
Registered: 2-9-2004
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"small retail businesses represent one sector of the economy that could be hurt by further decreases in remittances."
And conversely, if that money had stayed in the United States, how would it have affected our economy? Local retail would be bolstered, banks would
have more money, which they would invest to make more money, the invested money would be used for muncipal projects all over the world (foreign debt
bonds, et al.).
A 2% tax on bank deposits is a method of income tax (foreign remittance income) which would not otherwise be accounted for. In view of the former
point, this may encourage deposits in the US initially, and then a different type of transaction to tap the funds - an ATM card for instance.
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