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Lack of U.S.
Remittances Stagnates Guatemalan Economy
Lack of U.S.
Remittances Stagnates Guatemalan Economy
Guatemala - The financial crisis in the
United States seems to be having a direct
effect on Guatemala’s economy. Remittances
from Guatemalan migrants in the United
States to their native country in Central
America have dropped dramatically in the
past year.
According to the Central Bank of Guatemala,
remittances dropped 11.4 percent in February
from a year before, to $282 million for the
month. Jobs most dominated by migrant
workers, such as landscaping, have been
among the sectors hardest hit in the United
States.
Few economies in the world are tied as
directly to the United States as that of
Guatemala’s.
Although in recent years Guatemala has taken
steps to open its economy to foreign
investors, in 2008 remittances alone still
accounted for $4.3 billion or roughly 12
percent of the nation’s GDP, while only $724
million was spent by foreign investors and
Guatemala’s famous coffee crop brought in
only $646 million.
Just as in the United States, construction
in Guatemala drove the economy, as migrants
sending remittances to their families funded
most new construction. Where once there were
abundant construction jobs in Guatemala,
people are now struggling to survive, many
only having money to eat once a day.
Although some economists argue that
remittances serve as a hindrance to
development, a report by the World Bank,
which was edited by J. Humberto López, one
of the bank’s chief economists, states that
remittances to Guatemala reduced poverty by
providing the money for food, shelter and
basic health care.
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