US slowdown to stagnate remittance flow to Haiti

Financial woes in the US seem to be a 'double whammy' for the Haitian Diaspora. The first line of support for thousands of families back home, the Haitian immigrants are finding it difficult to cope with the dual attack from the slowing growth and higher inflation. The rising cost of living in both the US and the Caribbean country has reduced both the amount of funds remitted and the value of remittances received. The net impact – the thriving US-Haiti corridor sees possible stagnation in 2008 after years of fast growth.

The country is heavily reliant on remittance flow (remittances contribute about 30% of GDP). With 65% of the population under poverty line, any contraction in this steady source of income is likely to have substantial economic impact. The amount of money received from the Haitian Diaspora exceeds both the FDI and the annual revenue received from merchandise exports. At an individual level, the census figures show, one in every five families in Haiti receives foreign remittances.

According to a World Bank report, remittance flows to Haiti increased from $108 million in 1995 to almost ten times that amount in 2004. It continued to increase further from $1.07 billion in 2005 to $1.83 billion last year. However, the trends in the current year, industry experts say, depict a different picture. Wire transfer through Caribbean AirMail or CAM has been relatively flat in recent months.

While funds are also received from Canada, Dominican Republic and other Caribbean islands (during sugar cane harvest season), the US has remained the most important source of remittance over the years. However, the soaring fuel and commodity prices in the US is negatively impcating the Haitian immigrants, one of the lowest income groups there, leading to a fall in the average monthly remittance sent by them. Nearly half of the remittance flow goes to rural Haiti, where incidence of poverty is rampant. The situation has worsened due to the steep hike in fuel and food prices.