RemittancesGateway.org

Immigrants send more money home as economy revives

Friday, 14 May 2010 08:17

Source: Financial Times
By Suzanne Kapner

Immigrant workers in the US have started sending more money back to their home countries after cutting back sharply last year, yet another sign that the global economy is showing resilience.

Wells Fargo, the US bank, is expected to announce today that it saw a sharp rise in global remittances, especially from the US to Mexico, in the days leading up to Mother's day, the busiest time of year for such money transfers.

The dollar volume of -global remittances jumped 57 per cent compared with a year ago in the week leading up to the holiday, a record figure, said Daniel Ayala, head of Wells Fargo's global remittance business, which is the largest among banks that provide the service.

During the first quarter of the year, Wells Fargo remittances grew 35 per cent.

"Remittances to Latin America are on the rebound after an 18-month slowdown," Mr Ayala said, adding that although high unemployment rates remained a concern, especially in the construction industry, foreign workers had switched to other parts of the economy that had started growing again.

"A lot of immigrants who worked in construction have moved into retailing, the hotel industry and healthcare," said Dilip Ratha, an economist with the World Bank. Last month, the World Bank raised its 2010 growth projection for remittances to 6.2 per cent from 1 per cent. Remittances fell 6 per cent last year to $315bn.

The biggest slowdown was in money sent from the US to Latin America, but that seems to have bottomed, Mr Ratha said.

Asian and European countries, which did not experience such a steep drop, have also seen remittances pick up.

The one exception is Spain, where unemployment rates in excess of 20 per cent continue to curtail spending.

Foreigners, predominantly those born in Latin America, account for more than 12 per cent of the US population, or 36.5m people.

As a country, however, India receives the most remittances. The Indian diaspora sent home $47bn last year, slightly more than the Chinese did.