As if there wasn't enough evidence over the last year that global economies have not decoupled from the US economy, an article in this morning's Wall Street Journal provides more evidence of how the recession in the US has spread outside of our borders. According to Mexico's central bank, remittances during 2008 to Mexico by Mexican workers in the US had their first ever annual decrease since the central bank began tracking these statistics in 1995.
The article goes on to say that like Mexico, many poorer countries rely on funds from workers in the US as a big part of their national income. In fact, "remittances are the single largest source of national income in many countries. The Inter-American Development Bank reports high levels of dependence in Haiti (26%), Guyana (24%), Jamaica (18.5%) and El Salvador (18%)."
The chart below shows the year over year percentage change in monthly remittances from the US to Mexico, and further illustrates the extreme weakness of 2008. As shown, of the thirteen months where remittances have been negative, nine of them occurred during 2008.
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