Robust growth in 2019 despite political instability
The Moldovan economy grew by an estimated 4.2% in 2019, which is comparable to previous years. Growth was primarily driven by investments which increased by around 16%. Amidst buoyant investment activity, the construction sector showed the highest growth rate among the main sectors of the economy, increasing by 19% in 2019.
The Moldovan economy grew by an estimated 4.2% in 2019, which is comparable to previous years. Growth was primarily driven by investments which increased by around 16%. Amidst buoyant investment activity, the construction sector showed the highest growth rate among the main sectors of the economy, increasing by 19% in 2019.
External trade increased only slightly in 2019 following dynamic growth in the previous years. Inflation increased to a relatively high 7.5% at the end of 2019, but should decline again in 2020. The budget deficit amounted to only around 1.5% of GDP. All in all, the economic situation remained stable, despite having three different governments in 2019 including three months of coalition negotiations.
For 2020, growth of around 4% is expected. To maintain economic stability, the government should aim for a new IMF programme. This would also secure financing for its budget deficit, which is expected to widen to around 3.3% of GDP in 2020. In addition, policy makers are well advised to focus on reforms despite the presidential elections taking place this year.
