Apatzingán residents are worried these days about the closure of pizzerias in Manhattan and shoe factories in Chicago. This city of Michoacan state, in central Mexico, lives embraced by the economic ups and downs of the United States. Not only for its lemon and papaya exports, but also for the large remittances it receives from families who migrated to the northern neighbor to try their luck. With the economic crisis unleashed by the coronavirus and the drop in money transfers, that hug has become an anchor. In Mexico, the solvency of the more than two million households that receive them is at stake.
Remittances are an important lubricant for a stagnant economy like the Mexican. They are the second largest source of foreign currency and represent around 3% of the country’s GDP, the third largest recipient worldwide, behind only India and China. In States like Michoacán or Oaxaca, with 46% and 66% of the population in poverty respectively, money transfers account for more than 10% of the local economy. Since the 2008 crisis, these have not stopped growing and in 2019 they reached the record figure of $ 36,048 million, 40% more than ten years earlier. The prediction was that this year they would exceed 38,000 million. But the virus came.
More than 16 million people have applied for unemployment benefits in the United States since the start of the crisis. The migrant community, which is usually employed in the service sector or in construction, is one of the most affected and remittances are a thermometer of this discomfort. BBVA, the largest bank in Mexico, has already registered in its accounts for the second half of March a decrease of 10% in the reception of remittances. Nationwide, the bank’s research department expects a 17% drop this year.
Before the pandemic, Daniel Bautista, 24, worked up to 80 hours a week. He combined a job as a waiter in a Greek restaurant with another as a cook in a pizzeria in Brooklyn. Between them, he earned around $ 3,000 a month. That amount gave him enough to eat, pay the rent in a brown brick cottage in the borough of Queens, and send $ 100 to $ 300 each month and a half to his mother.
With the outbreak of the epidemic in the largest metropolis in the United States, Bautista lost his job in the Greek restaurant and in the pizzeria they cut his hours in half. Now he makes about $ 1,200 a month. Remittances are currently discarded. “I am earning enough to subsist, to cover basic needs,” he explains by phone. “It is desperate not to be able to help my family. Just telling them that everything is going to get better doesn’t do much good. ”
In the municipality of Atlixco, at the foot of the Popocatépetl volcano in the State of Puebla, Judith Alonso keeps what her son Daniel sent her in a box to use in case of emergency. A few months ago, he opened it to help buy medicine for his sister, who is suffering from breast cancer. “These are hard times,” he says. While not entirely dependent on remittance for a living, voluntary confinement is taking its toll on its other source of income. Sales of the family bakery, a simple little house painted white and bare of signs, have dropped 25% in recent weeks.
The situation is even more precarious in Michoacán and its mountainous lands, epicenter of the reception of remittances. There are four million Michoacanos in the United States, almost the same population that resides in the region. Of these, between 600,000 and 800,000 are undocumented, according to calculations by state authorities, and consequently are excluded from aid launched by the Donald Trump government. In 2019, they sent $ 3,584 million, more than the total state budget. The Secretary of the State Migrant, José Luis Gutiérrez, expects a reduction of up to 30% of shipments. “It would be very serious for Michoacán. Its economy is very determined by the behavior of the United States, “he maintains.
For María Teresa Pérez, 72, the monthly remittance of 1,000 pesos (about $ 40) was used to pay for electricity and water. A month ago, the Chicago factory where her daughter Tania worked closed and there is still no date for the reopening. She goes ahead with her husband’s pension, 81, and the chicken trade, but “she sells a little bit,” she says by phone from Apatzingán. “Thank God there has been no sick person right now. With fear one lives, and living daily “, he explains.
The NGO Oxfam predicts a probable increase of more than 10% in poverty levels as a result of the crisis and the fall in remittances. “They contribute to rural households in an important way to alleviate conditions of need and improve access to health,” explains Jorge Romero, a migration specialist at Oxfam. Of the households that receive remittances, 28% report them as the only source of income and another 32% as “very important”, according to a study published in 2019 by the Center for Latin American Monetary Studies. Among the most common uses are maintenance and health, cited by 90% and 51% of the respondents, respectively.
The federal government and the states have launched microcredit plans for small businesses and have expanded some existing social programs. However, most analysts doubt that this is enough. The pension for older adults, the largest social item of the Government, has a budget of about 5.5 billion dollars, seven times less than the volume of shipments in 2019. “Remittances are unemployment insurance, subsistence money more than any another government program. They are too large amounts; they have no substitute ”, says migration specialist Carlos Heredia, from the Center for Research and Economic Teaching (CIDE).
After the 2008 recession, remittances took eight years to return to their previous levels. This time, BBVA estimates that the crisis will be of shorter duration, but even so, it places the recovery fork between 2023 and 2028. Waiting for the restaurant where his son in Los Angeles, María Sánchez, a 60-year-old neighbor, to reopen. years of Apatzingán, prepares for a difficult period: “We are gathering, saving little by little and half we eat, even if it is beans with an omelette”.
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