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Carolin Busch

Drought-hit agriculture sector slows economic recovery

Agriculture is one of the economic sectors that have been less severely affected by the COVID-19 pandemic. Thus, it could be excepted that it would have a stabilizing effect on economies with large agricultural sectors such as Moldova, where agriculture accounts for 11% of GDP. Unfortunately, a stabilizing effect could not be achieved due to a severe drought that hit the country in the first half of the year.

  • Moldova
NL 62 | November - December 2020

The effects of this have become visible in Q3 2020, which includes the harvesting season and when output in agriculture dropped by 31%. The crops worst affected by this drought, corn, soybeans, sunflower, wheat and grapes, are among the most important agricultural exports. Considering that agricultural and food products make up 40% of Moldova’s exports, this has a large impact on the economy as a whole. Based on the size of the agricultural sector and its predicted overall decline of 27% in 2020, we estimate that the drought would have a negative effect on GDP in the range of 2 to 3 percentage points. It is therefore clear that instead of finding stability in agriculture, Moldova suffered from a double shock in 2020 with COVID-19 and the drought.

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