© TOM PENNINGTON/Fort Worth Star-Telegram/TNSResidents wait in line at the Banco Azteca banking outlet in Zamora, Michoacan, that handles Western Union wire transfers from the U.S. A large majority of the residents throughout Michoacan have relatives working in the U.S. and they rely on the money sent by relatives working in the U.S.
Springtime job losses and pay cuts in South Florida's immigrant communities meant many local immigrants had to stop sending money to relatives in their homelands.
After the coronavirus outbreak snowballed into a global pandemic, the World Bank in April projected remittances to Latin America and the Caribbean would drop by nearly 20% this year - the sharpest decline in recent history.
But as the Miami metropolitan area and other U.S. regions with significant Latin American populations emerged from COVID-19 lockdowns, remittance flows have started ticking back up. That's the takeaway from a new Pew Research Center study, which analyzed data from six Latin American nations' central banks.
Across the six countries included in Pew's analysis - Colombia, the Dominican Republic, El Salvador, Guatemala, Honduras and Mexico - remittances were 17% lower in April 2020 than in April 2019, a nearly $1 billion reduction. The vast majority of remittance dollars flowing to Latin America come from the United States.
The country that was hardest hit by this spring's slowdown in remittances was El Salvador, which saw a 40% drop in remittances in April 2020 compared to April 2019. The second- and third-sharpest drops during this time were recorded in Colombia (38.5% decline) and the Dominican Republic (32.5%).
But drop-offs proved short-lived.
By the time June came around, the Dominican Republic was able to take in 25.7% more remittances than it had in June 2019. Other significant summertime upticks were recorded in Honduras (15.2% more remittances in June 2020 versus June 2019) and El Salvador (9.8% increase).
Remittances play a crucial role in the economic development of several Latin American and Caribbean countries.
In El Salvador and Honduras, remittances account for nearly 20% of the gross domestic product, among the highest shares in the world, according to figures from the Inter-American Dialogue.
In Haiti, a country that was not part of the Pew study but that has very close ties to South Florida, that number is around 30%, making Haiti the most remittance-dependent nation in the Western Hemisphere.
"You would be hard-pressed to find a Haitian immigrant here who doesn't send money to Haiti," said Marleine Bastien, executive director of the Family Action Network Movement, a local Haitian advocacy group. "But our members still cannot pay their rent, they are not getting their unemployment checks. . People [in the Haitian community] right now talk a lot about not being able to help their family in Haiti. They are trying to help themselves."
The impact of remittance curtailment, she added, is "beyond bearable."
"I think people are rightfully concerned that we will see more famine as a result."
Although remittances seem to have rebounded in the summer, overall remittance flows during the first six months of 2020 remain below 2019 levels in four of the six countries included in the Pew study: Colombia, El Salvador, Guatemala and Honduras. During this period, the sharpest drop was recorded in El Salvador (-8%), followed by Colombia (-5.3%).
With the coronavirus crisis bringing Latin America to the brink of an economic contraction of historic proportions, reduced income from remittances could become one of many migratory push factors and contribute to renewed interest in migrating to the U.S.
"It's somewhat counter-intuitive, but when remittance flows slow from the U.S., then there is difficulty in remaining in the recipient country because there is no money coming," said Dr. Michael Touchton, a political scientist at the University of Miami, and one of the academics behind UM's new COVID-19 Policy Observatory for Latin America. "So even if the situation is worse here than it has been in a long time in terms of unemployment, if there is enough work so that the person in the U.S. can survive, well then there is a draw, an attraction."
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