Q24N (VOA) Voz de America (VOA) took to the streets to find out how the flow of money transfers is maintained among the immigrant community and spoke with experts to explain their impact in Latin America, amid the expected slowdown in economic activity in countries of origin of remittances.
Susy Castillo is from El Salvador and religiously sends remittances twice a month for a total of $1,800. She, like many immigrants in the United States, works tirelessly to send the necessary money to her families and loved ones so that they can survive and get ahead.
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Read more: Remittances to Nicaragua increased by 22.8% since the sociopolitical crisis began
“I send money to my mother and my children because they are studying. The oldest is in university and the youngest is about to finish school to also go to university. I have to deprive myself of many things here because everything is very expensive, but thank God I have been sending my remittance for 6 years and I have not missed a single month,” Susy Castillo, who works six days a week, 12 days a week, tells Voice of America. to 13 hours a day, to be able to meet their financial obligations.
Elmer is 27 years old and for seven years he has been sending remittances to his parents, who have a farm. “I send my parents to help them maintain the farm, buy food for the animals and the supplies they need,” the young worker told VOA, as he approached the window of a money transfer and exchange house. of checking in Manassas, Virginia.
“Everything in the US is more expensive, but happily I have always been able to send the same amount of $700 a month,” says Elmer.
María works in a hotel and like Elmer she came to deposit her remittance. This time the shipping was 100 dollars. “I send my parents to help them,” she said. “Our sending of remittance is very important because sometimes in our countries they don’t even have enough to eat or [when] they get sick. Thank God work has not decreased, but here in the United States we have to pay for many things and everything lately has become very expensive, but despite that I must continue to command,” María tells VOA.
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These testimonies are just a reflection of the reality that many immigrants live in the United States. Experts maintain that these shipments are “countercyclical.”
Read more: Northern Triangle of Central America received US$11.36 billion in remittances
“This means that people maintain their family obligation to send money despite changes in the costs of living. The cyclical trend of economic growth means that whether there is a boom or a depression the change in consumption is reflected, but in the In the case of the migrant, the change in consumption or spending occurs in other things, but it is not manifested in the sending of money,” Manuel Orozco, director of Migration, Remittances and Development of the Inter-American Dialogue, explained to the Voice of America.
This explanation coincides with what is experienced on the streets. According to what an employee of a money transfer house tells the Voice of America, it has been noticed that if the week’s check “comes out low,” the immigrant reduces the amount of his remittance a little, but tries to catch up. your next shipment.
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“We have seen that our clients, when they come to cash their check, keep the minimum to be able to send the remittance that their family member needs. And no matter how expensive everything is, because here [in the US] everything is extremely expensive, it is incredible how we Latinos do what we have to do: work and help our loved ones,” says the employee, who preferred to keep her name confidential. .
“Remittances will maintain their resilience”
According to the latest review on migration and development from the World Bank, published in June 2023, remittances will maintain their “resilience” and it is estimated that officially registered remittance flows to low- and middle-income countries will grow by 1.4% to reach 656 billion dollars in 2023, despite the fact that a reduction in economic activity is expected in the countries of origin of remittances, which could translate into fewer jobs and stagnation in wage growth.
“In the case of Latin American migrants, they are sending 20% of their paid work in the US to their families. For them, in times of crisis, they try to ensure that the sending of money does not change, in some cases they reduce the amount sent, but for them sending money is essential,” says Manuel Orozco of Inter-American Dialogue.
In the case of Latin America and the Caribbean, the projected growth of remittances for 2023 is 9% and will continue to represent 5% of the regional Gross Domestic Product, with growth rates that vary from one country to another, according to the Migration program. Remittances and Development of Inter-American Dialogue.
“The countries that benefit most from remittances in Latin America are those whose dependence on remittances is manifested in terms of the number of households that receive them. Any country whose remittance income is more than 10% of its GDP (Gross Domestic Product) is strongly dependent. Likewise, countries where one in every 20 households receives remittances are also considered very dependent,” says Orozco.
Economic power of Hispanics in the US also enriches the economies of the region
The United States has become the first remittance-emitting country in the world and Mexico, the second country with the largest receipt of remittances, reaching a figure of US$61 billion dollars.
According to a recent Wise report with data revealed by the Bank of Mexico, the state that sends the most remittances to Mexico is California with a total of 16.25 billion dollars, which represents 33.2% of the total remittances sent to Mexico.
Wise is an organization that works for transparency in sending remittances.
Now, if we review the figures in the rest of Latin America and the Caribbean, we see that remittances there reached around $311 million in 2020, which represents a significant increase. We also find Nicaragua with a growth of 50% in its remittances, Guatemala 18%, Honduras 17.9% and Colombia with an increase of 6.9%.
“The impact of remittances on the growth of Latin America is clear because the person who receives the money, spends it within the country, saves it, consumes it and effectively increases their purchasing power. Remittances help boost the economies of all these countries in a significant way,” says Efraín Antonio Florencia, spokesperson for Wise.
It is worth clarifying that the impact of remittances is on the economic growth of a country, but not necessarily on development. As Manuel Orozco of Inter-American Dialogue explains, “very few countries in the world have a development strategy that is focused on solving the causes of inequality, for example.”
If you are going to send remittances, be informed
“What needs to be motivated is to send money to your family member in a bank account so that they can increase their savings capacity. This increases their disposable income by 20% because they do not spend the money on the street, they do not lose it by having it in the stock market and increases liquidity capacity,” explains Manuel Orozco of Inter-American Dialogue.
The Wise organization in a recent study found that of the 55% of consumers who send remittances, only 18% are aware of the exchange fees related to the transfer. And of the 100% of people who send remittances for the first time through any provider, only 34% chose the best option on the market.
“When transparency in collections is implemented, people make better decisions. The key is to be better informed,” says Wise spokesperson, Efraín Antonio Florencia.
- Ask about associated charges
- Don’t be attracted by very low rates
- Ask about the exchange rate your family member will receive in the destination country
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