Recent reports have shown that remittances to El Salvador from Salvadorans living abroad have depreciated significantly from last year’s rate in the first five months of the year. From January to the end of May, $1.4 billion dollars were sent from Salvadorans in the United States and other countries to relatives still living in El Salvador, a 10% decrease since last year.
According to the Latin American Herald Tribune, the central bank points to the economic crisis in the United States and its effects on the Hispanic unemployment rate, up to 12.7% since April. Around 2.5 million Salvadorans now live in the United States, and in recent years remittances have totaled up to $3.8 billion dollars, or about 18% of the gross domestic product
Remittances have been falling since mid-2008, and the situation does not seem to be improving. In fact, in May of this year, remittances were up to 12.8% less than in May of 2009, a drop of $45.2 million dollars in a single month.
Everyday hundreds of Salvadorans leave El Salvador, mainly due unemployment and underemployment rates within the country. Most hope to improve their economic situation by getting a job in the United States and sending money to their families back home.
It is unclear at this time how the new administration will handle such a large drop in a significant source of the country’s gross domestic product. President Funes recently announced that he hopes his government will be able to create jobs through the financial stimulus plan for the nation’s economy that will total about $474 million dollars, but in the immediate future, this drop in many Salvadoran families’ means of household income could be very detrimental for the entire society.