Increased fears of deportation in the Trump Era will cause shipments of remittances to Mexico to reach a record level at the end of this year, the World Bank (WB) said on Tuesday.
The entity indicated that Mexican workers are also sending their savings.
At the end of the year, remittances will reach 30.5 billion dollars, which will set a new record for one of the main sources of income in Mexico and would mean a 6.5% increase over the 2016 figure.
“Despite the increase in deportations from the United States to Mexico (…), the remittances received (…) continue to increase, due in part to possible changes in migration policies.” Migrants are sending their savings back to home in case they should return, “said the WB in its report Migration and remittances released Tuesday.
US President Donald Trump has tightened immigration policy, especially toward Mexicans, with proposals ranging from the construction of a wall on the Mexican border and the cancellation of the DACA (Deferred Action for Childhood Arrivals) program of the Obama era to temporarily regularize undocumented immigrants to the United States when they were minors.
The young Mexicans are the main beneficiaries of this program and will be affected after the decision of Trump, because there are 689,029 people under this policy.
To this is added Trump’s threat to implement a tax or stop the flow of remittances to Mexico to pay for the border wall.
Other factors that are driving the sending of money to Mexico is the improvement of economic growth and the labor market in the United States, the WB said.
“It is having a positive impact on the prospects of remittance flows to Mexico, Central and South America,” he said.
The US economy grew 3.1% in the second quarter of the year but for the third could be affected by hurricanes that hit the various states of the American Union. The United States is close to full employment with an unemployment rate in August of 4.4%, although in the same month job creation slowed.
However, the WB warned that the growth of remittances in Latin America and the Caribbean will moderate around 4% in 2018 and 2019. For the region, it foresees an increase of 6.9% in 2017 to add 79,000 million dollars.
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REMITTANCES A LIFEGUARD FOR MEXICO AFTER THE SISMOS?
Remittances will be very useful in dealing with natural disasters such as the earthquakes and hurricanes that hit Mexico and the storms that hit the Caribbean, said Dilip Ratha, the report’s lead author, quoted in a statement.
“Remittances are a lifeline for developing countries … this is particularly true after natural disasters such as recent earthquakes in Mexico and devastating storms in the Caribbean,” Ratha said.
In 2017, in addition to the expected remittances in Mexico, India is set to become the main recipient in 2017, with $ 65 billion; followed by China, with 61,000 million; and the Philippines, with 33,000 million.
REMITTANCES WILL BE RECOVERED IN 2017 WORLDWIDE
Globally, remittances will grow in 2017 after two consecutive years of declines, predicts the World Bank.
Cash transfers to low- and middle-income countries are set to increase 4.8% in 2017, to reach $ 450 billion.
Economic expansion in Russia, Europe and the United States will allow immigrants and their families to send increasing amounts of money to sub-Saharan Africa, Europe, Central Asia, Latin America and the Caribbean, the study said.
The cost of sending money home is still high. Sending $ 200 cost 7.2 percent on average in the third quarter of this year, well above the 3 percent goal of the UN Sustainable Development Goals agreed in 2015, according to the report.
Ratha urged countries to reduce the costs associated with remittances.