Reverse Flow of Remittances Signals Deepening of U.S Economic Recession

By Noquel A. Matos


Renowned figures in the financial world like Larry Spinelli, nominated president of the Overseas Private Investment Corporation (OPIC) by President Obama this past January, believe that increasing bonuses in banks might be a sign of improvement in the current economic recession. However, a reverse flow of remittances from Mexico to the United States might tell otherwise.

Within this last year with the deepening of the mortgage fiasco induced economic recession, Mexican immigrants that usually sent 80% of their salaries to their family, have not being able to send no money at all. High unemployment rates have cost many of these day workers that did not enjoy a stable job their source of income. Family members back in Mexico have had to carry the burden.

As a result an unusual phenomenon without precedents have started, where a country where half of its population lives under the poverty line sends money to its migrants living in the world’s dominant power. The phenomenon hard to measure, because of its novelty and informal networks of remittances delivery however does not represent a complete shift in the flow of remittances. The number of remittances going from the United States into Mexico is still very significant with a record $16.4 billion for this year.

Nevertheless, in Chiapas, one of the Mexican districts’ with the largest population of immigrants in the United States, there is actually more remittances being sent by Mexicans to the US than Mexican immigrants in the US to their families in Mexico according to a small Chiapas banker.

This counter flow of remittance when Mexico’s situation is not particularly better than that of the United States with a predicted decline of 7.5% next year tells of the benefits of a different live style where one is self-sufficient and the importance of having a unified family. The families in Mexico that send money to their children in the US are poor peasants that they live in rural areas where they own their own land, and harvest their food.

All in all this might be the lesson in this phenomenon of reverse remittances that promises to be temporary, that in economic difficult times what matters is not abundance, but might.