Remittances to Ecuador Down 22% in 4th Quarter of 2008 as World Economic Crisis Begins to Bite

Latin American Herald Tribune, February 15, 2009

QUITO -- Remittances sent home by Ecuadorians living abroad fell 22 percent in the fourth quarter of last year relative to the same period of 2007, the Central Bank said.

The total value of money transfers to Ecuador between October and December 2008 came in at $643.9 million, $181.7 million less than the amount registered in the fourth quarter of the previous year.

Remittances in the fourth quarter were also down with respect to the third quarter (July-September 2008), when they totaled $700.6 million, according to the Central Bank's report released Friday.

The decline was due in large part to the global financial crisis and especially the economic slowdown in the United States, where an estimated 1.5 million Ecuadorians - half of that nation's total emigrant population - reside.

The Central Bank, citing official U.S. figures, said the U.S. economy shrank by 3.8 percent in the fourth quarter, "the biggest (contraction) in the past 26 years."

The U.S. unemployment rate has jumped to more than 7.6 percent in recent months, with the manufacturing and construction sectors - which employ a large number of immigrant workers - among the hardest hit.

Meanwhile, employment was down 3 percent in the fourth quarter in Spain - where 600,000 Ecuadorians live, making it the second-leading destination for emigrants from that country - due to nearly across-the-board declines in economic activity.

Spain's unemployment rate rose in the fourth quarter of 2008 to 13.9 percent and is now at its highest level in almost nine years, Ecuador's Central Bank reported, citing figures from the Iberian nation's National Statistics Institute.

Despite the crisis in those two countries, they still remained the source for the vast majority of remittances sent back to Ecuador.

In the fourth quarter of last year, 46.4 percent of the remittances to Ecuador were sent from the United States, while Spain accounted for 40.7 percent and Italy for 7.7 percent, the Central Bank said.

Remittances to Ecuador totaled an estimated $4 billion last year and are the Andean nation's second-leading source of foreign currency after oil export revenues, which between January and November of last year brought in $10.26 billion.