Workers abroad send less money home, import demand on the rise

The declining inflows of foreign currency from current transfers tend to become the main factor putting pressure on the current account deficit, given that their drop is sharper than that of the trade deficit, the traditional source of foreign deficit.

Financial and social issues in countries like Italy, Spain and Greece have affected the Romanians working abroad, who are now sending less money back home. The inflows from current transfers from abroad, which are mainly money sent home by the Romanians working in other countries, went down by 37% in the first four months compared with the same time of last year, while imports are growing faster, so that the pressure on the current account deficit has become worse, causing it to go up by 40.3% to 2.06 billion euros.

Foreign remittances amounted to merely 1.55 billion euros in the first four months in 2010, compared with 2.46 billion euros in the same time of last year.

The decline of transfers was caused by the fact that the main sources of foreign remittances are countries in Southern Europe, which are going through a sovereign debt crisis and are coping with a high level of unemployment.