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Remittances rebound

Tuesday, February 7, 2012

The more remittances a country gets, the greater is the likelihood that its domestic economy is a mess. In this case, 2011 was a good news-bad news year for the three Central American countries, which rely most on money sent from citizens living and working abroad.

The domestic economy in each of Guatemala, Honduras and El Salvador is struggling. On the other hand, remittances from other countries – mainly the United States – were up significantly, compared to 2010.

The central bank of Honduras is still working on the latest figures, but it estimates that remittances for last year will be about $2.8 billion, an increase of close to 9 per cent, compared to 2010.

For their part, Salvadoran emigrants sent home some $3.7 billion, an increase of 6.4 per cent over 2010, while remittances to Guatemala rose by 8.6 per cent to $4.4 billion.

The economies of all three countries are heavily dependent on this source of income, especially Honduras, where remittances amount to no less than 25 per cent of the nation's gross domestic product.

Around 15 per cent of the population of each of Guatemala and Honduras consists of economic migrants. In the case of El Salvador, emigrants amount to no less than a quarter of the country’s population.

The fact that vast numbers of people have fled their native land, in order to work precariously as “undocumented aliens” in the United States, reflects badly on the economies of the countries they left.

On the other hand, more remittances in poor countries at least help ensure that bad conditions don’t get worse.