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Woldemar Walter

Stable situation, but growth not high enough

The Moldovan economy grew by 4.5% in 2017. For the current year, it is expected to grow by only 3.8%. Just like in 2017, private consumption is the primary growth driver on the demand side, while the supplyside it is retail sales and manufacturing.

  • Moldova
NL 48 | July - August 2018
Macroeconomic Analyses and Forecasting

The macroeconomic situation is stable. Inflation is expected to fall below 5% and the Leu continues its appreciation against the US dollar, which started in the beginning of 2017. Exports as well as imports show double-digit growth, which is mainly due to increasing trade with the EU. The budgetary deficit increases from scarcely 1% of GDP in 2017 to 3.2% in 2018 but does not jeopardise fiscal stability. The planned additional expenditures are in fact meaningful investments.
Nevertheless, despite the stable situation, it must be concluded that the expected economic growth for 2018 and the following years of less than 4% is too low for a country like Moldova. To realise the economic growth potential, structural reforms e.g. in the judiciary and in education are necessary.

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