The pandemic is bearing down on Latin American and Caribbean economies. Beyond the daunting GDP contraction figures, people are struggling to make ends meet, and many depend on remittances—the cash that family members living and working abroad send home.
But how secure is that cashflow? In April, the World Bank predicted that remittances worldwide could see their biggest drop in recent history. In Latin America, the experience was mixed in the first half of the year, from record growth in Mexico, to a rebound in Guatemala, to an overall decrease in Colombia.
As Dr. Manuel Orozco told AS/COA Online’s Carin Zissis, although there was some cashflow decline in the region overall, migrants appear to have been better prepared than expected and with more solid savings than during the 2008–2009 global recession. On top of that, there’s an empathy factor. “Migrants realized that the conditions of the pandemic in their homelands were perhaps worse than they were in the United States,” says Orozco, director of the Center for Migration and Economic Stabilization at Creative Associates International. In the case of Mexico, he says that historically about 65 percent of migrants sent cash home, but that figure rose to roughly 80 percent with the pandemic. And cash from migrants “has helped cushion the external shocks form the global recession,” says Orozco, noting that in countries such as El Salvador, with a population of 6.5 million people, 1 in 2 households receive remittances.
"[Remittances] are filling an important welfare gap."
How migrants send money to their families is changing, too. Remitly, which allows people to send money home via a mobile app, saw its customers triple from May 2019 to May 2020. “What we’ve seen is a massive shift to customers trusting digital solutions to send money home because maybe they either can’t or don’t feel comfortable getting to that physical, cash-based remittance location,” Remitly CEO and Co-founder Matt Oppenheimer told AS/COA’s Elizabeth Gonzalez, adding that, for Remitly’s users, “it is of such paramount importance…to send money home to their families during what is obviously a global pandemic.”
Aside from how migrants get the money into their loved ones’ hands, in a region where many work informally and don’t have access to government assistance, remittances don’t just pay the bills—they can help keep the peace. “The idea is that migrants, in a sense, replace the state in so far as providing social insurance to their family members back in their origin countries…that remittances are filling that welfare gap,” says Dr. Roy Germano, author of Outsourcing Welfare: How the Money Immigrants Send Home Contributes to Stability in Developing Countries. “By providing an economic buffer to people, remittances have the potential to reduce civil unrest and political instability,” says Germano, also the filmmaker behind the award-winning documentary, The Other Side of Immigration, and a senior research scholar at the New York University School of Law.
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Elizabeth Gonzalez produced this episode. The music in this podcast was performed at Americas Society in New York. Learn more about upcoming concerts at musicoftheamericas.org.