World Bank: Record $30 Billion Leaving The US For Mexico
President Donald Trump’s tougher immigration enforcement has reduced the flow of people heading north across the U.S.-Mexico border, but it has had no effect on the amount of money heading in the opposite direction.
In fact, Mexico is on pace to receive more remittances from abroad in 2017 than it ever has before, according to World Bank estimates released Tuesday.
Mexico, which takes in more remittances than any other Latin American country by a wide margin, will likely receive $30.5 billion from the Mexican diaspora living abroad — 6.5 percent more than it did in 2016. About 95 percent of Mexico’s annual remittance haul comes from the U.S., according to Mexican bank BBVA Bancomer.
Remittances to Mexico from the U.S. have been rising in recent years due to improved labor market conditions for immigrants in America and the falling cost of sending money abroad, says the World Bank-sponsored Global Knowledge Partnership on Migration and Development (KNOMAD).
In August, the unemployment rate for the foreign-born population in the U.S. was 4.2 percent, compared to 4.6 percent for native-born Americans. The tighter labor market may be contributing to higher wages for Hispanic immigrants, boosting the overall value of remittances they send home.
“An improving labor situation for the foreign-born population and Hispanics in the United States bodes well for the immediate prospects for remittances to the region,” the KNOMAD report said. “Furthermore, a tighter U.S. labor market, which is close to reaching full employment, seems to be facilitating higher compensation in some sectors, especially in the construction sector, which tend to favor the average
volume of remittances.”
The Trump administration and some Republican lawmakers have eyed remittances to Mexico as a potential source of funding for a wall along the southwest border. Alabama Rep. Mike Rogers introduced in March a bill that would levy a 2 percent tax on all person-to-person wire transfers to Mexico and the rest of Latin America, with the proceeds covering the costs of wall construction. A separate bill in the Senate would have imposed a 7 percent fine on transfers where the sender could not prove he was working in the U.S. legally.
While those bills failed to gain traction in Congress, Mexican immigrants and the Mexican government alike remain wary that the rising value of remittances will once again make the cross-border flow of money an attractive target.
That’s because, in Mexico, remittances are a significant source of national income. Total personal remittances to Mexico accounted for 2.7 percent of gross domestic product in 2016, according to the Word Bank.
That year, Mexico’s $27 billion in remittances far exceeded the value of its oil exports, which totaled about $18 billion.
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