Mexican economy expected to flourish further
Remittance flows and overall economic activity has been so strong in Mexico as of late that money experts are raising their expectations about how vibrant the country's economy will be this year.
According to a new survey performed by the Bank of Mexico of 29 economists, gross domestic product is expected to grow 3.72 percent this year. That's up from 3.62 percent the last time the poll was conducted.
Also moving at a robust pace were remittances. The Bank of Mexico indicated that in April, an increased flow of money transfers resulted in $2.03 billion. For the year, that puts the value of remittances Mexico has received at $7.4 billion, more than 6 percent ahead of the same four-month period in 2011.
As has been noted by a variety of financial experts, remittances are one of the biggest sources of money for Mexico, particularly from those living in the United States. In fact, the money generated from remittances has been ahead of what tourism has brought in for the country.
While remittances can help establish a country's economic footing, not to mention the financial readiness of a family, a new study suggests that people who receive money from them often have savings accounts, which is a sign that they're financially responsible.
Christian Ambrosius, who conducted the research that was published by Free University Berlin School of Business and Economics, argues that "receiving remittances is strongly correlated with the ownership of savings accounts, and, to some degree, with the availability of borrowing options."
In other words, people who receive money from their loved ones aren't spending what they earn in a wasteful manner. Instead, they're thinking about what they can do with it and then setting it aside in savings accounts so that their earnings can grow.
The researchers also argue that not only do individuals benefit from remittances – as it increases their financial responsibility – but institutions are strengthened as well.
"These effects are more important for rural households than for urban households and are more important for microfinance institutions, than for traditional banks," the study indicated.
This is just the latest handful of ways remittances are beneficial to society.