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Remittances expected to fall by $15B

  • Story Highlights
  • Report: Main reason for drop is weakening of economies in "destination" nations
  • Money transfers among largest sources of external financing in developing nations
  • There are an estimated 150 million migrants worldwide, 2006 U.N. report found
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By David Ariosto
CNN
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WASHINGTON (CNN) -- The money that foreign workers send home will shrink by $15 billion this year, as the global economy limps along, the World Bank projects.

Such remittances, or money transfers, will fall from last year's high of $305 billion to $290 billion in 2009, the World Bank said in a report released this week.

Money transfers are among the largest sources of external financing in developing countries, often used to buy basic necessities in areas with rampant poverty.

"Because they flow directly from people to people, remittances become especially important for poor people," said Dilip Ratha, an economist at the World Bank and lead author of the report. "Many people use remittances as their only lifeline."

The main reason for the drop is the weakening of economies in "destination" countries where migrant and immigrant workers live, the report found.

"This time, the crisis did not start in the developing countries," Ratha said. "It started in the rich countries like the U.S. and in Europe."

There are an estimated 150 million migrants worldwide, many of who send part of their paychecks home each month, according to a 2006 U.N. report.

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As remittances decline, women such as 35-year-old single mother Janet Pilotin -- who recently lost her job as a caretaker for a family in Hong Kong -- face increasing hardships.

"I think of my children and how it will be," she said.

Half of the $600 Pilotin made each month was sent home to family in the Philippines.

Like many of her countrymen, she left home for financial opportunity abroad.

"That's the effect of the global crisis," she said. "Not just me, but all of us."

In places such as Atlanta, Georgia, remitting companies are feeling the pinch.

"Generally, people are using our service less and less," according to an agent at Mexico Transfer, a company based in Mexico City that makes money transfers in the United States and across Latin America.

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"People say there are no jobs or can only work a few days a week," said the agent, who requested anonymity because of company protocol.

"The whole business is down," the agent said.

CNN's Anna Coren contributed to this report.

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