Remittances last year grew to US$66.5 billion, but for the first time within this decade, the regional money flows have failed to record double-digit growth, surprising the agency that tracks the cross-border movement of private funds.

Jamaica, however, climbed from US$1.6 billion to US$1.97 billion, or about 23 per cent.

The Inter-American Development Bank administered Multilateral Investment Fund (MIF) reported Tuesday at a press conference in Washington that inflows to the Latin and Caribbean region were only 7.0 per cent improved over 2006.

"This is the first time since we started tracking remittances in the year 2000 that we haven't seen a double-digit increase," said MIF manager Donald F. Terry. "This is mostly because the region's two top recipients of workers remittances, Mexico and Brazil, departed significantly from past trends."

Mexico, which has a large migrant workforce deployed largely through-out neighbouring United States, remains the dominant recipient of remittance flows among Latin American countries with US$23.98 billion.

But, the MIF said, those funds represent near flat growth - "barely one per cent" - in 2007, which Terry said appeared linked to reluctance by workers to send money home in an uncertain economic climate in the US.

Brazilian real appreciates

Mexicans, said the MIF manager, both fear a US economic slowdown, and stricter enforcement of immigration policies that could limit their earnings.

Transfers to Brazil were down by about 4.0 per cent to US$7.07 billion, but here, Terry said, the opposite holds.

The Brazilian economy is strengthening, and so is its currency, the real, which in the past year, has gained 24 per cent against the US dollar.

The appreciation and increasing economic opportunities at home, said Terry, "have reduced the appeal of sending money home for many Brazilian immigrants in the United States."

The MIF analysis follows reports emanating out of the Bank of Mexico March 5 that Mexicans living abroad had sent home US$1.65 billion in January, down six per cent from US$1.76 billion during the same month a year earlier. Remittances are one of the country's main sources of foreign currency inflows, behind oil but ahead of tourism.

"We still don't know for certain whether this is a short-term change or the beginning of a new direction," said Terry, referring to the new Bank of Mexico remittance figures. "But if it were to become a trend, it will push millions into poverty."

Remittances, says MIF, have become a crucial source of income for many developing countries.

In Guyana, these flows represent 43 per cent of the gross national product; in Haiti 35 per cent; Honduras 25 per cent, and Jamaica and El Salvador 18 per cent.

In Jamaica, the flows compete with tourism/travel revenue as top earners for the country.

About three-quarters of the remittance flows to Latin America and the Caribbean come from the United States, as well as Spain and Japan. The monies finance mostly basic expenses such as food, shelter, clothing and medicines.

business@gleanerjm.com