Romanians are less and less confident in the short- and long-term recovery of the standard of living, according to a survey conducted by IRSOP between April 20-24. As a result, people consume less and save money for an expected crisis, increasing the possibility that it will happen.
Around 68% of people in Romania say that things will be worse in a year, and 45% believe the same when the timeframe is extended to five years.
“When people believe that life will not improve, they change their behavior, become apathetic, do not make plans, avoid entering business, emigrate, and through their behavior contribute to further deterioration of the situation,” the authors of the survey said.
When asked what they think will happen to prices in the next 12 months, around 75% expect prices to increase, while 8-10% expect them to remain the same.
Regarding their own income expectations for the next 12 months, 34% (38% in March) of people say incomes will increase, while 63% (62% in March) believe they will remain the same or decrease. Compared to last year, 12% of respondents say they are buying more for current consumption, while 55% say they are buying less. This means that retail sales will decline, and the labor market will also be negatively affected, according to IRSOP.
As for spending intentions this year, 46% (57% in March) intend to save for unforeseen situations. Roughly half of respondents intend to invest in their own or their children’s professional training, 32% in plan a holiday abroad, 11-14% intend to invest in their own business, 20-24% plan to buy a new or second-hand car, 8% consider buying a home, 10% consider starting a business, 10% plan to buy government bonds or stocks, and 7% consider buying land.
Among employed respondents, 77% (71% in March) consider their job to be secure, while 23% (29% in March) consider it to be at risk. Among employees whose jobs are at risk, 16% say jobs are easy to find in their locality, while 80% in April say they are hard to find.
According to the authors of the study, “the negative perceptions and expectations of the population are so high that they almost suggest the prelude to a recession.” Interestingly, those most affected by economic difficulties are also those most likely to abstain from voting, because they have endured a long period of hardship and believe there is no real and capable “savior” to lift them out of poverty.
High inflation expectations suggest that inflation will continue to rise and erode the standard of living. The fact that inflation does not appear to have a predictable end or a significant decrease undermines any optimistic expectations of consumers.
While expecting prices to continue rising, 71% believe they will have to manage with the same current income or even a lower one. This suggests that the government may reach a point where it will have to subsidize the cost of living for the population on a large scale.
The affordability of more expensive goods remains low, especially the possibility of buying a home or starting a business. On the other hand, there is a slight increase in the car market.
“Two types of investments stand out with higher growth: investment in professional training and the creation of a savings fund for unforeseen situations. Both reflect rising anxiety and the intention to change lifestyle,” the study pointed out.
(Photo source: radub85|Dreamstime.com)
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