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Remittances make the world work. Now the covid-19 could end that help for many

2020-07-16T01:01:28.225Z


As the coronavirus progresses in the United States, mass layoffs and business closings could soon make it difficult for many to send money home. An April report from the Asoc…


Advertisements promoting money transfers in the window of a specialized shipping service to Latin America photographed on March 28, 2011.

(CNN) - For the past decade, Mirian López Aceves, 30, received money from her mother who lives in the United States. But as the pandemic began to advance in the western hemisphere earlier this year, the monthly financial provisions on which it depends disappeared.

These funds not only help López Aceves, a graphic designer in the Mexican state of Chiapas, but also her five-year-old daughter and grandmother. They have never before been in a situation where they do not receive the extra help from remittances, like millions of other Mexican families.

Money ran out at the worst possible time, when López Aceves' clients were also on the decline amid the pandemic and closure. "I don't have much work at the moment," López Aceves told CNN in a phone interview. "The truth is that the salary I earn is not enough," he explained.

  • READ: 5 graphs that show why remittances are the salvation of some Mexican families

Her mother's money helped her to buy food, to save and pay for her daughter's education. With those funds, "they live well," she said. But because of the coronavirus, her mother can no longer afford to send money home.

Mexico depends on remittances

Money sent from abroad is a large part of the Mexican economy: an annual injection of almost 39,000 million dollars, according to data from the World Bank. Mexican President Andrés Manuel López Obrador says that 10 million Mexican families like López Aceves' depend on these money transfers, and during a daily press conference on May 8 thanked citizens abroad for their contributions. "Double, triple thanks to our migrant compatriots, because this helps a lot," he said.

94% of those transfers come from the United States, according to a November 2018 report from the Inter-American Dialogue research institute.

"Unfortunately, remittances from the United States are a very important part of Mexico's economy, more for the most vulnerable part of the citizenry," Larry Rubin, president of the American Society of Mexico, told CNN.

But as the coronavirus sweeps the United States, mass layoffs and business closings could soon make it difficult for many to send money home. An April report from the World Bank-backed Global Knowledge Association on Migration and Development predicted that remittances "to low and middle-income countries" will drop about 20% this year, in what it described as "the decline steepest in recent history ”due to unemployment and falling wages in host nations.

  • READ: Hispanics in the US are disproportionately at risk in the pandemic for their jobs and living conditions, experts say

López Aceves' mother lost her full-time cleaning job in March and found herself without a job for the first time in seven years. "If I didn't have some savings, I would have returned to Mexico," said the daughter. “And I was worried about myself, but also about my mother. She is alone up there with no one, "she added. Her mother declined an interview with CNN.

For now, remittances to Mexico do not appear to have decreased. According to Banco de México data, the country registered a record — and short-lived — increase in remittances in March this year, which reached just over 4 billion dollars, an increase of 36% over last year.

In an analysis published on Twitter, Mexican economist Jonathan Heath attributed the record increase to "the depreciation of the exchange rate that encourages higher shipments," and to many Mexicans who return home from the United States and may have sent their savings in advance " to avoid traveling with cash and being robbed. "

As the pandemic grew and blockades expanded, remittances dropped to normal rates in April and May, at almost $ 2.9 billion and $ 3.4 billion respectively.

The blow of the pandemic to Latin America, according to the IMF 19:12

A global pause in remittances?

Globally, remittances are a lifeline among people in rich and poor countries.

Remittances move more money to families in low- and middle-income countries worldwide than foreign direct investment and official development funds combined, according to the Institute for Migration Policy. So when the economies of rich countries stumble, families around the world may see their ability to pay for basic goods like food and medicine threatened.

Remittances to El Salvador, for example, fell 40% in April 2020 compared to the same month last year, according to the country's central bank.

"The ongoing economic downturn caused by covid-19 is severely affecting the ability to send money home and makes it even more vital to shorten recovery time for advanced economies," said World Bank Group President David Malpass, in a recent statement.

As unemployment soars in Latin America, the UN World Food Program (WFP) is already concerned about hunger in the region. "(Latin America) has seen a nearly threefold increase in the number of people requiring food assistance," WFP said in a statement in late June.

López Aceves' mother has found a new part-time job. But you still can't resume sending money home. So López Aceves moved an hour away to look for work, leaving his daughter in the care of his sister and hoping that the change will help her make ends meet.

  • LOOK: Mexico's reopening has been expensive: coronavirus cases and deaths have tripled

"We tried to quarantine, but I couldn't do it entirely because the situation here in Mexico is different," he told CNN. "I have to look for work, find a way to earn money to help with what is essential, which is food," he added.

Sending remittances Latin America

Source: cnnespanol

All news articles on 2020-07-16

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