Economic Monitor Moldova
Moldova is affected by several shocks due to the war in Ukraine. Energy and food prices, which, as a result, remain very high, and the consequent inflation pose a serious problem. The war has also partially disrupted foreign trade. Furthermore, Moldova accommodates a large number of refugees from Ukraine. The impact of these shocks results in a negative economic outlook for this year: GET forecasts a 0.4% decline in GDP with significant downside risks.
WA 16 | August 2022
Macroeconomic Analyses and Forecasting
Overview
- Moldova is hit by multiple shocks: high energy/food prices, trade disruptions and high refugee influx due to war in UKR
- After strong economic recovery with 13.9% GDP growth in 2021, outlook for 2022 is thus negative
- GET forecasts GDP to drop by 0.4% in 2022, with considerable downside risks
- Inflation very high; in July inflation rate reached 33.6% yoy; food and energy prices, kept high by war in UKR, are the key drivers of inflation
- Stable exchange rate and only moderately reduced foreign exchange reserves due to donor loans
- Money transfers rebounded after first months of war, supporting private consumption
- Fiscal deficit expected to grow to 7.2% of GDP in 2022 to cover higher social expenditures for energy subsidies and UKR refugees
- International financial support by partners (IMF, EU, bilateral) remains crucial
Special issues
- Gas prices. Energy security and affordability of heating remain crucial issues. Progress on energy efficiency could reduce pressure on households and state budget
- Electricity sector. Diversification of electricity supply a key priority for energy security
- Agriculture. Considerable immediate challenges and long-term potential for growth
