Dolia Estevez, Forbes, May 16, 2016
Remittances, the earnings that Mexican workers in the U.S. send home, quietly replaced oil revenues as Mexico’s number one source of foreign income last year. In late 2014, oil was still Mexico’s main source of foreign exchange, but due to a dramatic fall in oil production following a lack of investment and a plunge in international oil prices, this is no longer the case.
“Remittances surpassed crude oil revenues for the first time in history in December of 2014. Since then, remittances have continued to increase even to the point of representing more than twice the value of crude oil exports since December of 2015,” José Alfredo Coutiño, Moody’s Director for Latin America, told me.
In 2016, first quarter remittances of $6.2 billion were 56.7% higher than the $2.6 billion earned from oil exports for the same period. The remittances for the quarter represents an 8.6% jump over the funds sent in the same period in 2015, according to Mexico’s Central Bank data.
Last year, Mexican remittances were $24.8 billion, while oil exports were $18.7 billion. With remittances growing and oil revenues decreasing, the pattern is likely to continue.
Crude oil production in Mexico reached an all-time high of 3.5 million of barrels per day in 2003. The country current production level is 2.2 million of barrels per day.
Aside from Mexico’s oil industry woes, Coutiño said, remittances have surpassed oil revenues because there are more and better-paid jobs for Mexican workers in the U.S. and because the tracking system and accounting of money transfers between the two countries has improved.