The remittances of the Romanians abroad, the surest stream of financing for the foreign deficit over the last few years, collapsed in July, plummeting 90% compared with the same time of last year..
Current transfers, which are primarily money sent back home by the Romanians working abroad, significantly decreased, with the monthly surplus reaching a mere 120 million euros in July, compared with 500 million euros in the corresponding month of 2008, according to the NBR data. Compared with a decline of only 10% in the first five months of the year, the total volume of remittances was almost 30% lower in the first seven months.
"Net current transfers performed poorly in July. The monthly surplus stood at merely 120 million euros, one of the lowest values of the last five years. Beyond the effects caused by the reduction of the annual nominal wage increase pace and by the slowdown of the lending, consumer spending is also affected by the decline in remittance-related incomes," believes Florin Sinca, analyst with BCR.
After a number of years of steady growth, remittance flows started to slow down this spring. In April, the decline stood at 27%, in May it was lower, 15%, only to reach 50% in mid-year. The trend comes as a result of the international financial crisis and of the deterioration of the economies of the Western countries.
"Remittances fell in June and July, because in August Romanians came back home, anyway, and spent the money directly, without resorting to cash transfer solutions. We recorded an increase in brick sales in July and August, when Romanian workers came back and sales started to go down in September," says Iulian Mangalagiu, general manager of construction supplies producer Ceramica Iasi. He added that the Romanians who came back from Italy and Spain bought construction materials in August because they were cheaper, with ve
