Amidst the global pandemic caused by the Corona virus, the government of Moldova was forced to enact strict containment measures in order to avert a public health crisis. While there are tentative signs that the spread of the virus is slowing, the toll on the economy is likely to be drastic.
German Economic Team estimates suggest that the decline in output and demand from the containment measures alone is likely to sum up to MDL 11.4 bn in the second quarter. If this were not enough, Moldova is also faced with a very unfavourable external environment amidst recessions of the economies of its main trading partners and collapsing remittances.
This double whammy of domestic and external shock is likely to lead to a large GDP decline of 6.3% in 2020 when compared to 2019 – worse than during the 2008/2009 financial crisis. To ensure a robust recovery, the government needs to provide further support measures and a stimulus package. To do so, it will need additional external financial assistance on top of the emergency loans secured already.