Remittances in times of financial instability


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Presentation by Robert W. Meins (IDB) at the 8th Brussels Development Briefing - Brussels, 11 December 2008 -

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Remittances in times of financial instability

  1. 1. Robert W. Meins Remittances Specialist, Multilateral Investment Fund (MIF) Inter-American Development Bank (IDB)
  2. 8. 2007: $ 66.5 2008: $ 67.5 (est.) + 1.5 %
  3. 10. <ul><li>Economic situation </li></ul><ul><li>Immigration climate </li></ul><ul><li>Exchange rates </li></ul><ul><li>Inflation </li></ul>
  4. 12. Source: US Census (CPS)
  5. 13. Source: US Census (CPS)
  6. 15. Source: World Bank
  7. 20. Source: New York Times
  8. 21. Source: European Central Bank Period of rise in remittances from Europe Rapid appreciation of the dollar
  9. 24. Source: Orozco 2007
  10. 25. Source: Orozco 2007
  11. 26. <ul><li>Remittance data continues to improve, but is not yet perfect </li></ul><ul><li>Remittances are a family obligation, not driven by profit motives </li></ul><ul><li>LAC remittances likely to rise +/- 1.5 % in nominal terms </li></ul><ul><li>Crisis-related dollar appreciation will increase remittances in local currency terms in countries with free floating currencies. </li></ul><ul><li>$67.5 billion will be received by Latin American families in 2008. </li></ul><ul><li>80% spent on consumption 20% on savings and investment. </li></ul><ul><li>Remittance receipts remain a largely unused source of liquidity </li></ul>
  12. 27. <ul><ul><li>Economic situation: Further economic slowdown affecting industries important to migrant workers </li></ul></ul><ul><ul><li>Migration climate: Negative immigration climate in broader range of sending countries. Continuing rise in Hispanic unemployment. </li></ul></ul><ul><ul><li>Exchange rates: Depreciation of the Euro </li></ul></ul><ul><ul><li>Inflation: Sustained rise in food/fuel costs </li></ul></ul>
  13. 28. <ul><li>Remittances have been and will continue to be relatively stable financial flows </li></ul><ul><li>Relative importance of intraregional remittances likely to increase. </li></ul><ul><li>Once the global economy begins to recover, so will remittance growth </li></ul>
  14. 29. <ul><li>Robert W. Meins </li></ul><ul><li>Remittances Specialist </li></ul><ul><li>+1 (202) 623 1325 </li></ul><ul><li>[email_address] </li></ul>