The net effect of creating DCFTA over 5 years is estimated at $600 million - Expert-Grup
Such data was presented by the Independent Analytical Center in its study on the impact of DCFTA on the Moldovan economy. According to economist Adrian Lupusor, total exports of Moldova to the EU in 2015-2018 increased by $1.5 billion (+ 34%) versus 2011-2014, 4 years before the creation of the Deep and Comprehensive Free Trade Area (DCFTA). The double rate of increasing exports to the EU compared to other markets allowed to compensate for losses in the CIS market. The EU has strengthened its position as the main market for Moldovan exporters. At the same time, about 40% of the growth in exports to the EU was achieved solely through the creation of the DCFTA. Thus, according to experts, the net effect from the sale of DCFTA was about $600 million. The economist noted that the DCFTA had the greatest impact on the export of agri-food products (3 times more than on the export of industrial products). In 2015-2018, exports of agri-food products increased by $820 versus 2011-2014 (+ 52%), while industrial exports increased by $761 million (+ 26%). This dispelled concerns about the possible negative impact of EU trade liberalization in the agri-food sector, which is not so competitive. At the same time, trade between Moldova and the EU has become more balanced due to the rapid growth of exports to the EU market and a reduction in imports of industrial products from the EU. Despite the positive trends, Adrian Lupusor expressed concern about the concentration of exports, which indicates risks for sustainable growth and exposes the gaps related to the competitiveness of Moldovan producers. “More than half of exports of industrial products are focused on one market (Romania), and more than half of exports of agri-food products are focused only on three markets (Romania, Italy and the United Kingdom). This demonstrates the risks associated with the dependence of exports on demand in several EU markets, and also underlines the low level of competitiveness of domestic producers,” Lupusor stressed, noting the technical difficulties in exporting, difficulties with the origin of Moldovan products / re-exports, etc. The study notes that without deep systemic and structural changes, the benefits of DCFTA may be temporary. The expert recommends focusing state policies in the next 5 years on two priorities: ensuring the continuation and irreversibility of quantitative export growth to the EU market and improving the quality of exports to the EU market (through diversification and growth of value added created by exports for the country's economy). The expert proposes to promote the investment attractiveness of Moldova abroad with an emphasis on areas that form value added and meet high technological requirements for exports. It is also necessary to shift the focus from low labor to investing in raw materials and providing technical transfer. Among the recommendations are: upgrading the quality infrastructure, developing technical and financial support programs for businesses, more broadly informing SMEs about the benefits of entering the European market. // 05.07.2019 - InfoMarket.