Ever wonder what effect the people transferring money into Mexico – including immigrants, citizens or unofficial residents ” has on Mexicos economy?
The Mexican government reports remittance made up approximately $25 billion of the countries $1.6 trillion Gross Domestic Product (GDP) in 2008. The government also says worker remittance into Mexico has yet to even account for 1% of Mexicos GDP.
Many argue the validity of these claims however, since many of those Mexican workers sending money back home do so without presenting I.D. since they are unofficially making a living in the United States. Similarly, the recipient needs not present identification either. So how is this possible?
Many offline services allow people to transfer cash over to Mexico using just a password. The recipient then writes a secret code on a form or tells it to a cashier. It is not yet known how much money is unofficially sent this way by Mexican workers unofficially in the U.S.
What is known is the giant effect money coming into rural Mexico has on the people receiving it. Whether the money comes from a resident alien, citizen or an unofficial resident, it even has an impact on Mexicos urban population too.
When people wire funds to Mexico, they not only turn to wire services, they also entrust banks to ensure their money arrives safely.
Unfortunately for the economy, people arent sending as much money as they used to. The figure dropped from $26 billion U.S. in 2007 to $25 billion in 2008 and Jesus Cervantes, director of statistics of the Mexicans central bank says the outlook is grim for 2009.
The number might possibly have something to do with the fact that many of the Mexicans that migrate to the U.S. can often be found in the construction industry, which has taken a hard hit in the recent recession. Even still, people continue transferring. And even despite the falling numbers in recent years, its still 3 times the amount in 2001.
Questions still remain regarding the method people choose to wire money. Will people choose more traditional offline wire service methods, or lean towards the newer trends in pre-loadable, re-loadable credit or debit cards, a new quick and cheap way to wire your money.
Many U.S. services already allow recipients in Mexico to get the money on the same business day, but many turn to re-loadable cards since its easier than using location-based services in case your recipient does not live close to one. Also, to add money you simply jump online and pay about five dollars ” what can be easier than that?
Regardless of which method customers prefer or the percentage of Mexicos GDP transfers make up, its effect is massive on those receiving it.