Romania is one of the European Union countries most dependant on inflows of personal remittances. Namely, the money sent to their families by the Romanians working abroad.
This is the conclusion of the most recent statistics conducted by Eurostat. Along with Romania, there are also Croatia and Latvia to have the same dependence.
Dependency rates on international remittances are measured by the share of inflows in personal remittances in percentage of the respective country’s GDP. According to this, the highest dependency rates on remittances in the EU are observed in Croatia (7.3 % of GDP), Latvia (3.2 % of GDP) and Romania (3.1 % of GDP) in 2020Eurostat
So, 3.1% of the Romanian GDP is produced by the 3.6 million Romanians working abroad. In numbers, they remitted EUR 3.4 billion to their families. This helped their families live a better life in Romania, even surviving the challenging first year of the pandemic, and helped the economy.
Considering the foreign direct investments reached EUR 3 billion in 2020, Romania entered a new and undesired chapter: the direct investments in the country are exceeded by personal remittances of the Romanians working abroad.
It’s something new for Romania. Some think this is happening because many Romanians chose to leave their adoptive countries for good and got back in their native country, where they started a business or started pouring most of their earnings into the local economy. A definitive trend will be visible only after the 2021 statistics appear. Only then will Romania be able to take the appropriate measures to correct this trend by encouraging foreigners to invest in the country or promote this trend.
Either way, the money sent by the Romanians working abroad is much less than the money lost by the Romanian economy. Recent statistics praised the 1.1 million Romanians working in Italy for contributing to the Italian GDP with more than 15 billion EUR. It’s vast, and only less than a third of the Romanians work abroad.
In other words, instead of thanking the Romanians for living and working in other countries, as one of the Romanian Liberal politicians did recently, the Government should better think about how to get all those Romanians back to the country. Because the losses are more significant than the earnings in this case.