Economic situation in Moldova improving significantly (report)

German Economic Team (GET) Moldova

The Moldovan economy has to a large extent regained stability and returned to a growth track. The lack of financial support by international donors and low investment had created a difficult environment for growth in 2016. However, GDP increased surprisingly strongly by 4.3%, driven mainly by a good harvest and stable private consumption. In 2017, growth is expected to accelerate slightly. This year, especially stronger public investment – made possible by resumed international support – plays a key role.

Important macroeconomic indicators develop positively: Inflation stabilised already in 2016 and amounted to 6.4% after 9.6% the year before. Its level is expected to meet the target corridor of the National Bank also this year. The exchange rate is relatively stable since end-2015. Since the beginning of this year, remittances are increasing again; also import and export perform well. The budget deficit will amount to acceptable 3.7% of GDP in 2017.

In spite of the surprisingly good development, Moldova has not yet unleashed its full growth potential. For this to happen, structural reforms are necessary similar to those currently conducted in the banking sector with support of the IMF.