A new wave of decline will reach the major consumer markets in the second half of this year, considering the state is wiping 1 billion euros from consumption by cutting public sector employees' salaries, after the collapse of sales of homes and cars in 2009, generated by the salary cuts and redundancies in the private sector.
Romanians have already stopped making investments such as homes or cars so that the public sector employee salary cuts may be visible towards the end of the year in the consumer spending of households, which totalled some 17 billion euros in the second half of 2009.
Restaurant owners, malls and electrical home appliances and DIY retailers will be the hardest hit by the move to axe public sector employee salaries, reveal forecasts of MEMRB, Daedalus Millward Brown market research firms and market players. At the opposite end are food retailers and utilities suppliers, which may have stable turnovers during the second half despite the plummeting incomes of clients working in the public sector.
Total consumer spending of a household (there are about 8 million households in Romania) stood at 1,446 RON in the third quarter of last year, being divided into 12 major categories. Around 41% of a household's current expenses budget go to food and non-alcoholic beverage purchases, one of the biggest weights in Europe, reflecting Romanians' low living standards.
Amid VAT hike and the 25% cut in public sector employee salaries, it is possible that the weight of foodstuff in a household's expenses to stay flat as home fitting and maintenance products and clothes or footwear are likely to be the first to be erased from the shopping list.
A new wave of decline will reach the major consumer markets in the second half of this year, considering the state is wiping 1 billion euros from consumption by cutting public sector em
