Does Declining Remittances By Latinos Bode Ill For The Philippines?

This is where it gets interesting.

chart courtesy from the New York Times

This from New York Times’ Julia Preston…

``In a sign that the economic downturn is hitting hard among Latino immigrants, more than three million of them stopped sending money to families in their home countries during the last two years, the Inter-American Development Bank said on Wednesday.

``With fewer people sending money home, money transfers to some Latin American countries have started to decline, reversing five years of often spectacular growth. In the first quarter of this year, transfers to Mexico dropped 2.9 percent from the first quarter of 2007, Mexico’s central bank reported on Wednesday, the first significant decline since Mexico began tracking the transfers in 1995.

``For Latin America as a whole, the amount of the money transfers, which are known as remittances, remained virtually flat over the last two years, the development bank reported. It estimated total remittances to the region at $45.9 billion in 2008, an increase of $500 million over 2006.

``That contrasts with the period from 2001 to 2006, when the amount of remittances to the region tripled, to $45 billion from $15 billion, according to figures from the development bank, a multilateral organization based in Washington that finances development projects in Latin America. Total remittances did not drop more sharply in the last two years because those immigrants who continued to send money sent larger amounts more frequently, the bank’s survey found…

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The Philippine Peso has been on a decline following the revelation of the Rice Crisis.

Now that we see signs of declining remittance trends in Latin America, this should pose as a double whammy for the Peso IF we believe the “experts” are correct that remittances have principally driven the Peso’s appreciation.

Let us see.