Can the Northern Triangle Cope With Fewer Remittances?
Zhen Pan, associate attorney at Diaz, Reus: “The decreased need for services in various industries has caused millions of layoffs, including among migrant workers who engage in service jobs at restaurants and small businesses. The ripple effect of this would be a dramatic fall in remittances to Central America, a region heavily dependent on remittances from migrants working in the United States. In countries such as El Salvador and Honduras, remittances make up nearly a fifth of the country’s GDP. While the percentage is relatively lower in Guatemala (13 percent), roughly 98 percent of its remittances come from the United States. Given these countries’ heavy reliance on remittances, a drastic decrease would have an immediate, significant negative effect on their economies and family welfare, as remittances have been an effective means to alleviate poverty, enhance health care and reduce child labor. At this moment, it is too early to estimate how soon migrant workers would regain their capacity to send money to relatives in their home countries. The lesson from the 2009 recession, which had an 8 percent increase in the unemployment rate within 18 months, indicates that the frequency of remittances will likely remain low even in the aftermath of the coronavirus pandemic.”