Economic Monitor

Economic Monitor Issue 14 | June 2021


  • Political uncertainty continues ahead of the Parliamentary elections on 11 July
  • Economy is expected to rebound despite uncertainty: we forecast GDP growth of 4.8% for 2021
  • Growth to be driven mainly by strong consumption and export dynamic
  • Inflation remained stable throughout crisis, now slowly picking up and moving towards NBM target corridor; forecast for 2021 (average): 2.5%
  • Exchange rather stable throughout the COVID-crisis and higher FX reserves on the back of donor lending
  • Budget deficit to reach 4.0% of GDP in 2021, after 5.1% in 2020
  • EU just announced a very large recovery package for Moldova of EUR 600 m, including macro financial assistance, grants and investments

Economic Monitor Issue 13 | January 2021 (Update February 2021)


  • New President Maia Sandu took office on 24 Dec 2020; after the resignation of PM Ion Chicu, Aureliu Ciocoi was appointed acting PM; parliamentary elections expected in spring 2021
  • In 2020, Moldova’s economy suffered twin shocks with COVID-19 and a severe drought in the agricultural sector; we forecast GDP to decline by 6.7%
  • Recovery in 2021: GDP forecast to grow by 4.5%
  • Inflation remained within the National Bank’s target corridor in 2020; however, it is expected to decline to 1.8% in 2021
  • Budget deficit is expected to reach 5.4% of GDP in 2020, due to decreased revenues and increased expenditures; available sources of external financing (IMF, EU) only partially used

Economic Monitor Issue 12 | June 2020


  • We forecast GDP to decline by 6.3% in 2020 due to Corona crisis fall-out – deeper recession than after global financial crisis
  • Consumption, investments and exports all expected to decline; lower imports and higher government spending mitigate the negative effect on GDP
  • Economy to recover strongly by 5.5% in 2021
  • Inflation to decline to 1.3% in 2020 (after 4.8% in 2019) as economy runs below capacity
  • As such, monetary policy rate expected to decline further and to remain low for the foreseeable future
  • Exchange rate holding up so far amidst support by National Bank, but moderate depreciation possible in 2020 as economy opens up again
  • Increasing public expenditures and falling revenues results in a budget deficit of 5.4% this year – assuming the government can access external assistance

Economic Monitor Issue 11 | January 2020


  • New government. Socialist minority government still has to prove its commitment to reforms
  • Improving the business climate. Proposals in cooperation with the European Business Association
  • Reform concept for the Investment Promotion Agency. To make the Investment Promotion Agency more efficient, a target group-oriented approach should be followed
  • Intercity bus market in Moldova. A strategic planning process is required, which should include an integrated mobility master plan

Economic Monitor Issue 10 | September 2019


  • The new government. Big challenges ahead for the unusual coalition of pro-Russian Socialists and pro-EU block ACUM
  • Economic effects of the DCFTA. After 5 years of implementation we see a strong positive effect on exports to EU
  • Reorientation of Moldovan Investment Promotion Agency. The reorganization also requires an adaptation of tasks and processes

Economic Monitor Issue 9 | January 2019


  • Monetary policy normalisation in leading economies. So far no impact on Moldova, due to low foreign debt and prudent policy in recent years; nevertheless need to be cautious
  • Perspectives of agricultural insurance. Current system had only limited success, we recommend a simple alternative or a gradual reform
  • Household over-indebtedness. Some microfinance institutions contribute to increasing household over-indebtedness through irresponsible lending
  • Effect of the DCFTA. Strong exports growth to the EU, higher FDI from EU

Economic Monitor Issue 8 | June 2018


  • Exports development. EU market remains the key driver for Moldovan exports. EU direct investment boosts exports from the automotive sector (esp. wiring harness)
  • EU tariff rate quotas. Recommendation to increase quotas for grapes and plums
  • Transparency of consumer loans. Intransparent use of the annual percentage rate of charge for consumer loans. Legal framework and supervision should be strengthened

Economic Monitor Issue 7 | January 2018


  • Banking sector. Stabilisation reached after banking fraud, crediting of the private sector still decreasing
  • Foreign direct investment. Role of FDI for the economy so far underestimated, as a study of GET Moldova has shown
  • Economic reforms. Comprehensive reforms to be assessed positively; too early for final assessment
  • Increasing tax revenues. Increase in tax revenues can at least partly be attributed to reforms; positive example for structural reforms

Economic Monitor Issue 6 | June 2017


  • Cluster development. The creation of clusters can contribute to industrial development and FDI attraction
  • External trade. Extension of trade with CIS is desirable, but should not happen at the expense of trade with the EU; criticism of the DCFTA is unfounded
  • Banking sector. Recommendations how to absorb excess liquidity in the banking sector