The remittances of the Romanians abroad, the surest stream offinancing for the foreign deficit over the last few years,collapsed in July, plummeting 90% compared with the same time oflast year..
Current transfers, which are primarily money sent back home bythe Romanians working abroad, significantly decreased, with themonthly surplus reaching a mere 120 million euros in July, comparedwith 500 million euros in the corresponding month of 2008,according to the NBR data. Compared with a decline of only 10% inthe first five months of the year, the total volume of remittanceswas almost 30% lower in the first seven months.
"Net current transfers performed poorly in July. The monthlysurplus stood at merely 120 million euros, one of the lowest valuesof the last five years. Beyond the effects caused by the reductionof the annual nominal wage increase pace and by the slowdown of thelending, consumer spending is also affected by the decline inremittance-related incomes," believes Florin Sinca, analyst withBCR.
After a number of years of steady growth, remittance flowsstarted to slow down this spring. In April, the decline stood at27%, in May it was lower, 15%, only to reach 50% in mid-year. Thetrend comes as a result of the international financial crisis andof the deterioration of the economies of the Westerncountries.
"Remittances fell in June and July, because in AugustRomanians came back home, anyway, and spent the money directly,without resorting to cash transfer solutions. We recorded anincrease in brick sales in July and August, when Romanian workerscame back and sales started to go down in September," says IulianMangalagiu, general manager of construction supplies producerCeramica Iasi. He added that the Romanians who came back from Italyand Spain bought construction materials in August because they werecheaper, with very many houses in Suceava, Botosani and Iasicounties storing bricks in their yards now.
Romanian 'strawberry pickers' have been among those who sentthe highest amounts of money back home in Europe in recent years.According to World Bank statistics, Romania ranked first in Europeand tenth in the world in terms of money sent back by migrantsworking abroad in 2007.
Remittances exceeded one billion euros for the first time in2001, having gone up since then, to more than 6 billion euros in2008.
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