Fewer sending money to Mexico

McALLEN —America’s money train to south of the border is slowing in the face of a faltering U.S. economy and controversy over illegal immigration.

Between January and March, the amount of money sent from the United States to Mexico dropped by 2.9 percent from the same period in 2007, according to the Banco de Mexico.

Many countries depend on these remittances to help thousands of low-income residents. Remittances are second only to oil as Mexico’s largest source of foreign income. In countries such as Honduras, remittances make up a quarter of all gross domestic product.

“The families receiving remittances are usually the poorest,” said Robert Meins, a remittance specialist with the Inter-American Developmental Bank, an organization that tries to develop financial markets in Latin America. “They are the ones most likely to migrate here to the United States if their situations worsen.”

Bankers and analysts fear a drop in remittances could be a sign of a weak U.S. economy, where even illegal immigrants, who will often work menial jobs for small wages, aren’t able to find jobs.

Until now, remittances had grown at a steady pace since the Mexican government first started tracking the transactions in 1996. People in the United States sent $5.35 billion to Mexico in remittances between January and March of this year, down $158 million from the same period in 2007.

Even in the Rio Grande Valley, immigrants are having a harder time finding jobs, said Juanita Valdez-Cox, South Texas director for La Union del Pueblo Entero, San Juan-based advocacy group for immigrant farm workers.

“A lot of people are losing their employment,” Valdez-Cox said. “Not only that they are fearful of losing their jobs, more are getting deported because of raids at the jobs.”

It’s not just the amount of money being sent to Mexico, but the number of people sending it.

In the last two years the number of Latino immigrants in the United States sending money back home has dropped by almost a third, according to the Inter-American Developmental Bank survey.

The survey found that many respondents sensed more economic pressure and more job discrimination, Meins said.

In the Rio Grande Valley, bankers say they’ve seen a change in remittances to Mexico.

“There has definitely been a decrease in total remittances, while our market share has increased the total dollars being sent to Mexico are slightly down from the last two years as well as the number of remittances,” said Carlos Garza, president and CEO of McAllen-based Inter National Bank.

Garza also oversees remittance companies in New Jersey and California, which have seen drops in remittances, he said.

“It’s not surprising when you consider that a lot of immigrants work in the construction area and the housing industry has taken a big hit,” Garza said.

Banco de Mexico reports that about 25 percent of Mexican immigrants in the United States work in the construction sector.

With the drop in remittances to Mexico, $158 million stayed in the United States instead of going to Mexico. However, fewer remittances won’t mean a healthier U.S. economy, said Roberto Coronado, an economist with the Federal Reserve Bank of Dallas.

“The decrease is a signal of how the U.S. economy is doing,” he said.

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