OAXACA, Mexico, March 20, 2008 (AFP) - The weakening US economy and dollar are already having a direct impact in Latin America, where millions of people rely on remittances from relatives in the United States, according to figures and families.

Maria Rodriguez, 40, living in the poor southeast Mexican state of Oaxaca, has taken to selling tortillas to augment the money her husband sends each month from California.

'He sends between 250 and 300 dollars almost every month, but this money doesn't meet our needs, that's why I have to sell tortillas every day,' she told AFP.

Her four children rely on the remittances to go to school. But they have grown up barely knowing their father, who works as a gardener in Los Angeles without proper immigration documents.

'Since my husband left eight years ago, he's come back six times, but says he can't work our land because, even though it's very difficult over there with the 'migra' (the US border patrol), at least he has work,' she said.

Nearly a third of Oaxaca's 1.6 million inhabitants have emigrated to the United States, many leaving after a 2006 uprising that disrupted the all-important tourist trade.

In the Mexican state of Chiapas, the slowing US economy is being even more keenly felt. Many of the indigenous rural families have stopped receiving money this year from US-based relatives.

Wilfredo Hernandez, spokesman for the Independent Regional Rural Movement, said much of the population was starting to despair, and women were turning to farming to support their families.

According to a study released this month by the multilateral investment fund of the Inter-American Development Bank, Latin American emigrants sent some 66.5 billion dollars back home last year.

Although that was seven percent higher than the previous year, it was the lowest rate in seven years.

'I don't think we've ever seen it at less than 15 percent,' the fund's manager, Don Terry, said.

Mexico is the biggest recipient of remittances to Latin America, accounting for more than a third of the total.

The money being sent is a vital pillar of the economy, being the main source of foreign exchange after oil revenue and accounting for 2.8 percent of gross domestic product.

But in 2007 the inflow to Mexico grew a meager one percent, essentially stagnating in what Terry said was a 'disturbing' development.

Brazil, Latin America's biggest economy, is also feeling the impact. Remittances fell four percent last year compared with 2006, to 7.1 billion dollars, according to the fund.

The cited reasons for the slowdown were different in each country.

The estimated 11 million Mexican-born immigrants in the United States were less inclined to wire money home because of tighter US immigration laws and the worsening US economy, Terry said.

Many Mexicans work in the US construction sector, which has been hard hit by the credit crunch triggered by the subprime crisis, and the generally worsening employment climate.

On the other hand, in Brazil Terry said it was 'good news' that was cutting the inflow.

A flourishing economy and the rocketing value of the real, Brazil's currency -- which gained more than 20 percent against the dollar last year -- explained why remittances were down.

'The economy's going so well that people don't feel pressure to leave, and those abroad are returning home in the tens of thousands,' the fund manager said.

Central America is holding up, so far.

The fund's study showed that overall remittances to Guatemela, El Salvador, Nicaragua, Panama and Costa Rica increased 11 percent.

But Terry said it was uncertain whether the decline seen in Brazil and Mexico would spread, with disastrous results for the families that rely on the foreign inflow for basic necessities such as food, rent and medicine.

'If it were to become a trend, it will push millions into poverty,' he warned.

The majority of the remittances were being sent from the United States, according to the study, with emigrants in Europe and Japan also contributing.