Mexico gets more cash from its workers abroad than from oil

Mexico gets more cash from its workers abroad than from oil
by Christine Romans and Patrick Gillespie   @CNNMoney September 1, 2016: 12:39 PM ET

Mexico heavily depends on its workers living abroad to send cash back home.

Almost $25 billion flowed last year from the pockets of Mexicans living overseas, almost all of it from the U.S. That's even higher than what Mexico earns from its oil exports.

The average remittance in June was $300.08, which when multiplied by the number of Mexican workers abroad totals billions each year. Donald Trump has his eye on those billions -- earlier this year, he said the cash could pay for the wall he has proposed between the U.S.-Mexico border, even though he didn't mention that in his meeting with Mexican President Enrique Peña Nieto on Wednesday.
Essentially, Mexico's most lucrative natural resources are the people who leave home. The cash remittances are a lifeline for the country and a critical source of economic development for America's southern neighbor.
Remittances are even expected to top $28 billion this year. All that money is dependent on a border that allows people to cross. Trump threatens this money flow in 2 ways: putting a stop to remittances and building a wall. Both would turn off the money spigot.
It might well be a reason behind the invitation from Mexico's president to the GOP presidential nominee to meet with him. Trump has suggested changing a rule in the USA Patriot Act to halt money transfers. While it's not clear such a move to put capital controls on immigrant pay would be legal, even the threat to shut off those funds is cause for concern.
The funds fuel a big part of Mexican consumer spending, from building houses to paying for schools. Remittances have also been growing faster than wages and inflation. It's also a critical time for Mexico's economy, which is showing signs of weakness.
The economy recently shrank for the first time in three years. Its currency, the peso, is near an all-time low, only worth 5 cents. However, a depreciating peso means every dollar sent home goes a little further.
Mexico is the world's 12th largest oil exporter and a major auto manufacturer. It collected $23.2 billion from exporting oil last year.
But the decline in oil prices and slumping auto sales in America -- Mexico exports lots of cars across the border -- have slowed growth.
Against that backdrop, workers' remittances are becoming even more vital for Mexico. They're even higher than Mexico's revenue from tourism and foreign investment.
CNNMoney (New York) First published September 1, 2016: 12:39 PM ET
http://money.cnn.com/2016/09/01/news/economy/mexico-peso-money-transfer-trump-remittance/index.html