Brazilians abroad send record money to the country

Cristina Costa, 50 years old and resident for 20 of them in Marlborough, Massachusetts, says that sending money back to Brazil has never been so advantageous.

“Today I have a cleaning company, a landscaping company and I also work part-time in a supermarket”, says the Belo Horizonte girl from Minas Gerais.

“I always send US$ 4 thousand (R$ 22.3 thousand) to US$ 5 thousand (R$ 27.9 thousand) a month to Brazil and lately it is even better to send, with the dollar in the range of R$ 5 .50, R$ 5.40”, says the entrepreneur, who in Brazil invests in Quarter Horses, in addition to helping family members.

In the pandemic, with business doing well in the United States and the economic situation worsening in Brazil, she also sent money to help families from Minas Gerais with the purchase of basic food baskets.

“During 2020, almost the whole year, I helped 22 families. To date, I continue to help three of them”, says Cristina. “A basic basket was costing around R$ 77, with the dollar at R$ 5.50, you send US$ 100, it’s R$ 550, you can help several families with this.”

Cristina is not alone in taking advantage of the devalued real to send money to Brazil.

According to the Central Bank, from January to September this year, personal transfers originating in other countries and destined for Brazil already total US$ 2.84 billion (R$ 15.9 billion), the highest value in the historical series starting in 1995 and 18% increase over the same period in 2020.

Last year, Brazil received US$3.31 billion (R$18.4 billion) in personal transfers from abroad, a record for the indicator so far, which should be surpassed in 2021.

According to experts interviewed by BBC News Brasil, a combination of factors explains the record transfers in the midst of the pandemic.

The strong devaluation of the real against currencies such as the dollar, euro and pound; the faster recovery of the economies of developed countries than the Brazilian one; high unemployment in Brazil; and the new wave of Brazilian emigration, particularly to the US, are among the causes cited.

The US was responsible for the biggest growth in the volume of remittances, totaling US$1.47 billion (R$8.2m) between January and September, up 33% year-on-year.

According to the Ministry of Foreign Affairs, the Brazilian community abroad surpassed 4.2 million in 2020, a growth of 17% over 2018, when the last survey was carried out. Of this total, 42% or 1.78 million lived in the US, followed by Portugal (276 thousand), Paraguay (240 thousand), United Kingdom (220 thousand) and Japan (211 thousand).

According to data from the Federal Revenue, from January to November this year, 15,500 Brazilians delivered declarations of definitive departure from the country to the tax authorities. In the full year of 2020, there were 20,900, even in the midst of the pandemic. Between 2017 and 2019, declarations exceeded 23,000 each year, almost double the annual average of 12,800 declarations delivered in the previous six years.

Dollar up 40%

For Leonardo Cavalcanti, professor at the University of Brasília (UnB) and coordinator of the Observatory of International Migration (OBmigra), the devaluation of the Brazilian currency is the main reason for the record of remittances from abroad in 2020 and 2021.

Since the end of 2019, the dollar has gone from R$4.019 to R$5.609 (Friday, 26th), an increase of 40% against the real.

In the most recent period, the devaluation of the Brazilian currency has been reinforced by increased uncertainty in public accounts, due to the advance of the PEC dos Precatório, a proposal that changes the calculation of the spending ceiling and allows the government to default on some financial obligations.

The dollar is also gaining strength amid market fears over the new omicron variant of the coronavirus.

“If you’re earning in dollars, to convert this into real, the gain you get is almost double the amount of years ago, when the US currency did not exceed R$ 3”, says Cavalcanti.

“Many immigrants who plan to return take the opportunity, for example, to invest in real estate here in Brazil, because this is a symbol of success for the immigrant”, observes the researcher.

high unemployment in Brazil

For Pedro Barreiro, leader of Banking and Expansion for Brazil at Wise (formerly TransferWise, one of the main services used by Brazilians to transfer funds between countries), helping family members is another important reason behind the increase in remittances.

“Since the beginning of the pandemic, we have noticed that more and more Brazilians and people abroad have been sending money to Brazil, not only from the USA, but also from other developed regions, such as Europe and the United Kingdom”, observes Barreiro.

“Through recipients in Brazil, we notice that many of the shipments are from people providing financial support to family members who were affected by the pandemic”, says the executive, highlighting the high unemployment in Brazil and the faster recovery of the economy, particularly in the US.

In Brazil, the unemployment rate was 13.2% in the quarter ended in August, with 13.7 million unemployed, according to the most recent data available by the IBGE (Brazilian Institute of Geography and Statistics).

In the US, the unemployment rate fell to 4.6% in October, and the number of requests for unemployment benefits in the country dropped to the lowest level in 52 years in November.

According to Barreiro, in March 2020, resource shipments to Brazil through Wise grew 250% in the annual comparison and, in March of this year, there was a new increase of 30%.

“There was no peak and then a fall, which shows us that it is not a behavior of taking advantage of the exchange rate at a specific moment. At the beginning of the pandemic, shipments tripled and stabilized at this level three times higher,” says the spokesman. voice of the company.

From Wise’s perspective, the high volume of shipments to Brazil should continue in 2022.

“Our forecast is that this will continue, especially considering that next year is an election year, which is usually marked by many instabilities in Brazil”, says Barreiro.

“So the real should suffer a lot of volatility, economic activity should continue to be affected and many families in Brazil should still depend on their families abroad. That’s why we don’t expect the inflow of values ​​to decrease in the short term.”

New wave of immigration to the US

Eduardo Siqueira, a professor at the University of Massachusetts in Boston and a 20-year researcher on Brazilian immigration to the US, also highlights one last factor that may explain the recent increase in remittances: the new wave of Brazilians leaving the country.

“Normally, sending remittances has to do with the needs of families in Brazil, the greater the crisis, the greater the remittances,” says Siqueira.

“But it is also necessary to consider the size of the Brazilian population leaving the country in recent years. It is not surprising that there has been an increase in remittances, if the size of the Brazilian population abroad has increased”, considers the researcher.

He points out that, in the US, a considerable part of the Brazilian community lives without the proper documents and that is why it does not even appear in official statistics.

According to data from the US Customs and Border Protection agency, the number of Brazilians illegally crossing the country’s southern border broke a historic record in fiscal year 2021 (which runs from October 1, 2020 to September 30, 2021). There were 56,881 Brazilians detained, an increase of 700% compared to the same period in 2020.

Until then, the peak of illegal migration of Brazilians had been in 2019, when around 18,000 tried to enter the US illegally across the land border with Mexico.

Due to this increase in illegal immigration of Brazilians to the US via Mexico, the Mexican government informed on Friday (26) that it will again require visas for Brazilian travelers.

The USA is historically the main destination for Brazilian immigration, with emphasis on the American States of Massachusetts, Florida, New York and New Jersey. The existence of a Brazilian community established in these places encourages the continuity of immigration, due to the links between immigrants.

“It’s what we call chain immigration: whoever came first was returning to Brazil and announcing the possibility of improving their lives in the United States. This started fundamentally in the Rio Doce valley, around the municipality of Governador Valadares, but later expanded to many other regions of Brazil”, observes Siqueira.

As it is mainly an economic phenomenon, of people seeking to improve their living conditions, immigration to the United States is cyclical, growing when the economic situation in Brazil gets worse.

“This happened during the period of [governo do ex-presidente Fernando] Collor and is happening again in this most recent period. Even before the Bolsonaro government, at the end of the Dilma government, there was already a new peak in immigration to Brazil”, says the professor.

“What explains this is the profound Brazilian crisis, which is not just economic, but political and social, and the insecurity in which people live”, says the researcher.

“With people losing their jobs, closing deals and not seeing alternatives to stay in Brazil, they decide to explore the possibility of coming to the United States. But the situation here is not easy either and people often suffer a lot.”

Money from Brazil abroad

While remittances from abroad to Brazil grew strongly in 2020 and 2021, transfers in the opposite direction, from Brazil to other countries, registered a sharp drop last year, but show a recovery in 2021, albeit at levels still below pre-pandemic levels.

In 2020, personal transfers from Brazil abroad totaled US$1.47 billion (R$8.18 billion), 30% down on the US$2.09 billion (R$11.6 billion) sent abroad in 2019.

From January to September 2021, remittances to other countries already total US$ 1.17 billion (BRL 6.5 billion), an increase of 10% compared to the same period in 2020, but still below the US$ 1.54 billion (BRL 8.6 billion) transferred out of January to September 2019.

In terms of the volume of money sent, the main destinations are the USA, Portugal and the United Kingdom, in line with the largest Brazilian communities abroad.

But the biggest increases in sending money in 2021 were to Bolivia (29%) and Haiti (19%), reflecting the recovery of the Brazilian economy, which allowed immigrants from these countries living in Brazil to send resources back to their families.

According to the Ministry of Justice, Brazil received just over 1 million immigrants between 2011 and 2019, of which 660,000 long-term immigrants, who are those who remain in the country for a long period. In this second group, the largest communities are Venezuelans (142,000), Paraguayans (97,000), Bolivians (58,000) and Haitians (54,000).

Despite the significant number of immigrants in Brazil, Venezuela does not stand out in remittances recorded by the Central Bank, due to low confidence in the country’s financial system — Venezuelan immigrants tend to send money to their families physically, across the border, or by means alternatives to the official financial system.

Rosana Camacho, president of the Association of Bolivian Residents, assesses that the 45% drop in remittances to Bolivia last year and the 29% rise this year are a picture of the difficulties and recovery experienced by Bolivian workers in Brazil.

“Much of the Bolivian community works in commerce and in the textile area. When everything closed, production and sales were paralyzed, many were unemployed and many also returned to Bolivia due to the lack of work”, says Camacho.

With the reopening of the economy, the situation of immigrants has improved, but even so, they are suffering from the same problems as Brazilians: shortage of raw materials from China, high production costs and rising cost of living due to inflation.

“All the problems that afflict Brazilians afflict immigrants, but a little worse, because immigrants in general are informal and underemployed”, observes the president of the Bolivian association. “Gas went up, electricity went up, food went up, what the immigrant can save to send is smaller.”