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How much will US unemployment hurt in Central America?

Around the world, the early bells of a so-called end of the recession have been intoxicating. Mexico and Brazil are among the recent nations to proclaim themselves to have emerged from the depths of crisis.

But the United Nations served a sobering chill to this region Thursday, when its Economic Commission for Latin America and the Caribbean (ECLAC) reported that it projects 9 million people will fall into poverty by the end of this year, bumping the number of the region's poor up to 189 million.

Sound like a lot of folks?

Of course it does. It's about 34 percent of the population. And that's only a 1.1 percent increase over 2008's total of poor people. The population living in extreme poverty is expected to grow to a total 76 million (13.7 percent of the population), up from last year's 71 million — a 0.8 percent increase.

This is a blow to the region's efforts to revive economies, which for the past six years drove the number down from even more frighteningly high levels.

And as far as Central America's concerned, an ominous question mark looms, a U.N. Latin America expert recently told me. With the U.S. unemployment rate hitting 10.2 percent in October, over a 25-year record, "the first thing that comes to mind is what will happen to remittances?" said Martin Hopenhayn, head of ECLAC's social development division.

During a conversation at a social innovation event earlier this month in Guatemala City, Hopenhayn said families in countries like El Salvador, Nicaragua and Honduras depend enormously on money coming in from emigrant workers, primarily in the U.S. This cash makes up as much as 18 percent of the gross domestic product of some Central American economies, he said.

One of the projects awarded at the event in Guatemala has grown in part thanks to migrants' remittances. Women in Oaxaca, Mexico, reinvest the money into a business making "comfort food" out of nopal cactus and have revitalized their community.

It's hard to think what scarcer cash inflows could do to such initiatives.

I'm looking at the World Bank's Web site for more insight on remittances and I find this: A November projection for remittances in 2009.

Overall, the World Bank says the indicators are better than expected. But wait. Looking more closely, inflows particularly to Latin America and the Caribbean will have a larger-than-expected decline this year, the report says.

Opening up a long Excel spreadsheet, my eye goes straight to El Salvador, probably because of recent tragedy that struck that poor Central American nation: flooding and landslides caused by rains from Hurricane Ida killed as many as 200 people and displaced 15,000, devastation comparable to 1998's Hurricane Mitch.

Salvadoran migrant remittances could fall nearly 10 percent to $3.46 billion in 2009 compared with last year's total. If the World Bank's projections are right, that percentage drop will be the average decline in money inflows across Latin America and the Caribbean. Analysts expect the global average to decline by 6.1 percent.

For many of the families in this region just barely eking out a living, a cutoff from expected funds could spell out disaster, and full fledged poverty.

As some governments and corporate leaders are preparing to pop their champagne corks, somewhere in the shadows of this alleged recovery, the world's poor are at risk of getting lost between the green shoots.

http://www.globalpost.com/notebook/costa-rica/091119/how-much-will-us-unemployment-hurt-costa-rica