MEXICO CITY – The money that Mexicans living in the U.S. send home, a lifeline for both the economy here and millions of families, has suffered its steepest decline on record, dragged down in large part by the American financial crisis.
The bad news, announced Wednesday by the Bank of Mexico, follows government assurances that the U.S. crisis would not have a severe effect on Mexico.
Remittances fell to $1.9 billion for August, a 12.2 percent drop from the same month last year, the bank said. “In the coming months, it can be anticipated that … family remittances will continue to show a loss in strength,” the bank said.
Remittances account for the second-largest source of foreign income in Mexico, after oil exports, and have more than doubled in value in recent years, to nearly $24 billion in 2007. The money is used to pave roads, start businesses, furnish homes and help feed and clothe families.
But the trend began to reverse this year. Both the U.S. economic downturn, especially in the construction sector that employs many Mexican immigrants, and tightened controls along the U.S.-Mexican border have slowed the flow of money and people.
August’s showing was the biggest fall in remittances since authorities began keeping records 12 years ago, the bank said.