Survey: Romania's remittance-to-GDP ratio at 2.8 pct in 2023

The amount of remittances to Romania was 2.8% of GDP in 2023 compared to 2.1% in 2012, shows a survey by Alpha Bank Romania chief economist Ella Kallai.According to Alpha Bank Romania's monthly bulletin Macroeconomy "En detail", remittances are a source of financing for households, coming from the earnings of household members abroad. The amount of remittances is correlated with the number of emigrants, whose number is all the greater the lower the incomes in the country of origin, the freer the cross-border movement and the higher the demand for labor in high-income countries. In addition, distance, language and cultural affinity can weigh significantly in the selection of a destination country.With 17,000 euros worth of GDP per capita in 2023, Romania stands out among EU member states both by the size of its emigration and the amount of remittances received. In 2024, 24% of the country's population (4.6 million) lived abroad, up from 14.7% (4.2 million) in 2010, putting Romania at the top of EU charts by this indicator.According to the cited source, in 2023 the remittance intensity calculated as the ratio between remittances (percentage of GDP) and the number of emigrants (percentage of the population) was the lowest in the case of Poland, Romania and Bulgaria - at 0.1, which means that on average each percentage of emigrants in the total population sends remittances of around 0.1% of GDP. Long-distance emigration, specific for the countries on the periphery of the EU such as Bulgaria, Romania or Poland, tends to weaken the connection with families at home and implicitly remittances, unlike the border emigration which is practised in countries located in the vicinity of rich states, such as Hungary and the Czech Republic. The long-distance emigration of Poland, Romania and Bulgaria is characterized by the continuous growth of the emigrant population, while the border emigration of the Czech Republic and Hungary has remained constant.In the interval 1990 - 2024 the number of emigrants increased 4.6 times for Romania and doubled in the case of Bulgaria and Poland, with the departures of new emigrants exceeding the number of emigrants returning home. In contrast, in the Czech Republic and Hungary, returns have offset new departures, which means that only long-distance emigration favors an increase in the duration of emigration, which weakens ties with families at home and remittances, the cited survey shows.Between 2012 and 2023, the structure of the emigrant population in the region by main destinations - the EU, European countries outside the EU and America - saw different trends. In Romania, the share of emigrants to the EU and America decreased from 84% to 74% and from 9% to 6%, respectively, while the share of emigrants to European countries outside the EU went up (from 4% to 17%), mainly to the United Kingdom and Switzerland.The share of remittances originating from the EU in the total increased in Romania from 61% in 2012 to 70% in 2024, and in 2023, the intensity of remittances to Romania from the three destinations with a comparable emigration - Germany, Italy and Spain - was different. Romanian emigrants from Germany, representing 29% of the Romanian emigration to the EU sent 39% of remittances from the EU, those from Italy - with emigrants representing 26% of the Romanian emigration to the EU - accounted for 19% of remittances from the EU, and an equal percentage of emigrants to Spain sent 9% of remittances from the EU.According to the author of the survey, Romania's remittances-to-GDP ratio is in a decline, and the trend cannot be reversed even if emigrants' incomes were to increase by them moving to countries with higher incomes.