Reverse Remittances Up As Economy Tanks

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By Newsweek Editors

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America's immigrants have long been propping up family members back home (and by extension, developing-world economies) with remittances. Now they're asking for the favor to be returned. A new phenomenon of "reverse remittances"—cash flowing backward from developing countries to immigrants in rich nations—is on the rise. Money-wiring services report a flood of new transactions, and World Bank economist Dilip Ratha—who tracked the phenomenon in Mexico, the Dominican Republic and India—found significant declines in foreign-currency deposits (6, 7 and 12 percent, respectively), accounts typically held by immigrants. Though Ratha says some of the withdrawals could be supporting relatives in-country, they're also likely serving as a lifeline to family abroad. But as the economic crisis deepens, it may not be long before the money runs dry.

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