Mexico Now Receives More Dollars From Migrants Than From Oil

Mexico received more money from migrants abroad last year than it got from selling its oil. But while some see this as a sign of future dynamism, others say it highlights fundamental weakness about the domestic economy.

According to Mexico's central bank, remittances from Mexican workers in other countries — who are overwhelmingly located in the United States — totaled $24,770 billion dollars in 2015. This was $1.3 billion dollars more than the income from Mexican oil sales which totaled $23,432 billion dollars according to the state oil company Pemex.

Remittances have never been higher than oil revenues since they first began to be counted as foreign income in 1995, and the new state of affairs reflects consistent rises in the amount of money sent home as well as the fall in oil prices.

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But whether this is a good or a bad thing for Mexico depends on who you talk to.

The government says it is good because the new balance shows that the Mexican economy is less dependent on oil exports. Government officials also stress that rising remittances will stimulate internal consumption and that, in turn, will kick start job creation and growth.

"If you look at the states that have high migration to the United States we see high levels of consumption that are clearly impacted by the remittances," Finance Minister Luis Videgaray told reporters of the money sent home by the estimated 12 million Mexicans living over the country's northern border.

"One of the great competitive advantages of Mexico, and great differentiators of the Mexican economy in the face of the rest of the world, is that we are part of North America," he added. "One of the most important links in that chain, perhaps the most important, is that the economic activeness of Mexicans in the United States is growing."

Videgaray also pointed to healthy domestic consumption figures in states with long migration traditions, such as Michoacán, Guanajuato, and Jalisco.

Alejandro Cervantes, a senior economist at the Banorte bank, supported the government's celebratory positive spin by stressing that migrants are increasingly leaving behind jobs in fields and factories to work in the better paid service sector.

"The kind of jobs that Mexicans in the United States are getting is changing," Cervantes told VICE News. "Remittances grew by 4.8 percent last year which is really helping out Mexico's poorest homes."

The "super dollar" has also meant that remittances received are worth significantly more. The Mexican peso lost nearly 17 percent of its value against the US currency in 2015.

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But other observers insist that the rising importance of remittances speaks volumes about the deeper weakness of the Mexican economy and the way it is failing the country's 56 million poor people.

"To celebrate remittances being higher than oil income is pure stupidity," said well-known economist David López of the National Autonomous University of Mexico. "What it shows instead are the fault lines in the economic structure of the country."

López said that rather than highlighting Mexico's declining dependence on oil, the new state of affairs actually underlines the lack of productive diversity and limited economic vision he says has dominated government policy since it moved to the right in the1980s.

Economist Rogelio Ramírez de la O — who would probably have been named Mexico's finance minister if leftist candidate Andrés Manuel López Obrador had not narrowly lost the 2006 presidential elections — agrees.

"The fuss the authorities are making over the remittances means that they are recognizing that we don't have other [growing] sources of foreign currency," he told VICE News. "There is a sense of defeat."

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Follow Alan Hernández on Twitter: @alanpasten