Economic problems in Italy and Spain, where more than 1.5 million Romanians legally work, could cause a drastic decline in foreign currency inflows, which help to finance Romania's foreign deficit.
The signs of a slowdown in the amount of money sent back home by Romanians abroad became visible at the beginning of the year, and NBR's statistics in May recorded stagnation compared with the same time last year, worth some 2.17 billion euros.
In May 2007, the transfers from Romanian workers abroad witnessed a significant rise of more than 34% compared with the previous year, only to see the growth rate slow down to half by the end of the year.
Inflows from foreign remittances have been unable to reach 10% growth since the beginning of the year. At the same time, foreign deficit posted an 11% increase after five months.
The amounts Romanians working in Italy and Spain sent back home were estimated at 3.4 billion euros, that is 66% of overall net transfers. The loss of jobs, as a result of economic slowdown in the two countries, could therefore have a powerful impact on the inflows of foreign currency that Romania is able to count on this year.
"The increase in the amounts sent by Romanians working abroad is already slowing down and the dynamics of foreign currency inflows could worsen because of the deterioration of economic conditions in developed countries, especially Spain," believes Catalina Constantinescu, senior economist of ABN Amro Bank Romania.
She feels that such a scenario could risk an increase in foreign deficit in the second half, given that exports too could slow down, as a result of a decline in consumption in eurozone countries. Still, she says that EU funds could become a more important source to cover the deficit, considering projects have already been approved for which Brussels contributes 1.9 billion euros.
Quarterly economic growth can no longer reach 1% in Italy, while the same indicator went down below 3% in Spain in the first quarter of this year.
According to unofficial estimates, there are approximately 2 million Romanians working abroad, mostly in Italy and Spain.
"I think remittances would have decreased their contribution to the current account of the balance of payments with or without the crisis in Spain and Italy, and the crisis will only make this trend worse. It is hard to estimate how much remittances will go down because it hard to estimate what the Romanians there will do - they will either come back, or migrate to other countries," comments Ionut Dumitru, head of Raiffeisen Bank's research department.
As for the potential impact on the exchange rate, he says that remittances are no longer as important as they used to be anyway, and the exchange rate is rather influenced by speculative flows and by investors' sentiment on international markets.
Dan Bucsa, Bancpost's chief economist also sees something good in the economic decline in countries like Italy and Spain.
Pentru alte știri, analize, articole și informații din business în timp real urmărește Ziarul Financiar pe WhatsApp Channels
