One in four Romanians has incurred excessive debt since the outbreak of the pandemic.
Within a very short time, the Covid-19 pandemic has turned our lives upside down. From a financial perspective in particular, the pandemic has forced a lot of people to reconsider planned expenditures or to take on debt just to make ends meet. Romanian consumers have also felt the impact of the crisis. The Covid-19 Financial Report commissioned by the EOS Group shows that many of them have even slipped into excessive debt over the last year.
Overview of key findings:
- The financial situation of Romanian consumers is deteriorating as a consequence of Covid-19.
- 28 percent of Romanians have been forced to take on debt as a result of the pandemic,
- while one in four has slipped into excessive debt since the beginning of the crisis.
- The crisis has hit single parents, women and younger people particularly hard.
Although the pandemic is a global crisis, every nation and population group is affected differently. Within the scope of the Covid-19 Financial Report, which online poll specialist Dynata conducted on behalf of EOS, 1,000 Romanian consumers provided information about how the pandemic has affected their consumption patterns and debt situation.
One in four respondents took on debt that they are unable to pay back.
Romanians are borrowing money to cover their living expenses and health costs.
So far, more than one in four Romanian consumers (28 percent) has incurred debt as a result of the Covid-19 crisis. At just under 58 and 30 percent respectively, most of them used the money they borrowed to cover their ongoing living expenses and health costs, One in five spent it on renovation work (22 percent) or housing costs (19 percent). 36 percent got into debt to the tune of RON 2,400, while 57% incurred an even higher amount of debt.
It’s perfectly understandable if people are forced to take on debt temporarily to cover the necessities of life. We are in an exceptional situation and at present, nobody can reliably predict how it will develop.
Single parents, younger people and women suffering particular financial hardship amid the crisis.
Sole parents have been the hardest hit by the pandemic, with one in three (34 percent) taking on debt to survive the crisis financially. From a demographic perspective it is also the younger generations that have borrowed money in the course of the crisis. One in three (34 percent) 18-29 year-olds also stated that they had taken on debt. By way of comparison: this was the case for just 20 percent of 50-65 year-olds. There is also an imbalance between the sexes: Whereas 31 of all female respondents have borrowed money, just one in four men (25 percent) had done so.
Looking to the future, one in three respondents (35 percent) expects to have to take on debt in the next six months. It is therefore not surprising that it is sole parents who are the most pessimistic about the future: 47 percent of them assume that they will have to take on new debt in the next few months, closely followed by 44 percent of younger respondents. The fact that young consumers in particular are struggling to get through the crisis is likely to be due to the youth unemployment rate, which was already high before and has now been further fueled by the pandemic.
Since the outbreak of the pandemic, 24 percent of those polled have ended up with excessive debt.
“It’s perfectly understandable if people are forced to take on debt temporarily to cover the necessities of life. We are in an exceptional situation and at present, nobody can reliably predict how it will develop,”
says Georg Kovacs, Managing Director of EOS in Romania. For 24 percent of those polled, this has meant that they have slipped into excessive debt since the start of the pandemic and can no longer pay back their debts. Here too, sole parents have been hit hardest, with one in three (34 percent) unable to pay back their debts amid the crisis. Younger respondents and female respondents were also over-represented, at 30 and 27 percent respectively.
A look at the international comparison in the report reveals that as far as debt is concerned, Romanian consumers were hit hard by the crisis. 12 percent of respondents were affected in Germany 15 percent in Spain and 19 percent in Croatia, but only in Bulgaria (32 percent) have more consumers incurred debt during the pandemic than in Romania. Looking to the future, 35 percent of Romanian consumers fear that they are going to have to take on debt in the next few months.
What is excessive debt?
Excessive debt refers to a situation where the debt incurred by a person or a company exceeds their own assets. In the case of private individuals this is usually preceded by an unexpected event like the sudden loss of a job or a serious illness. However, poor money management can also often result in excessive debt.
Consumer behaviors: Going without vacations, renovations – and health?
Off on vacation, but not until after the crisis.
The difficult financial situation of many Romanians is also reflected in their consumption patterns. Most respondents (64 percent) said that they had gone without a planned vacation during the pandemic, while 42 percent had refrained from spending on renovation work and 35 percent on items like furniture. Even spending on health (20 percent) and education (17 percent) had to be cut, something that sets off alarm bells for Georg Kovacs: “When financial resources are tight it makes sense to cut your spending on things that are not absolutely necessary. However, if your health suffers as a result, this is a matter of concern.” Only one in ten said that they had not given up anything during the pandemic.
With a view to an eventual end to the crisis, a majority of respondents (65 percent) said they would prioritize spending on the vacation they had planned. They would then spend money on renovations (38 percent) and furniture or furnishings (30 percent).
The Covid-19 Financial Report reveals how consumers are experiencing the crisis
The aim of the Covid-19 Financial Report is to show how consumers in various countries have experienced the pandemic so far. In this context, the focus is on their financial situation and how this has changed in the course of the crisis. What effect did the crisis have on people’s consumption patterns? To what extent and for what reasons did consumers have to take on debt, and were they able to pay it back? To find this out, online polling specialist Dynata surveyed 7,000 people from five European countries about their circumstances on behalf of EOS. As well as Romanians, consumers from Germany, Croatia, Bulgaria and Spain also took part. The results indicate which population group is affected by the crisis and to what extent, and show the kind of personal payment difficulties that consumers can reckon with in the future.