Moldova’s economy is gradually recovering in 2021 and by the end of the year the country's GDP growth is expected at 7% - EBRD.
This is stated in the Transition Report 2021-22, published by the European Bank for Reconstruction and Development. It notes that the Covid-19 pandemic caused a sharp decline in Moldova's GDP by 7% in 2020, while domestic consumption, investment and exports have dropped significantly. At the same time, this year the Moldovan economy is on the path to recovery, restoring amid a gradual increase in investment and the revival of household consumption. Against the backdrop of growing global demand and domestic consumption, Moldova's gross domestic product in the first half of 2021 grew by 11.7% year on year. The automotive value chain led to a 13.8% year-on-year increase in exports in US dollar nominal terms in the first half of 2021. By 2021, remittances were exceptionally high, increasing by more than 23%. This contributed to a rebound in economic activity, with GDP growth of 11.7% in the first half of 2021. Following the rise in food and oil prices and the depreciation of the exchange rate, inflation accelerated from near zero in January to 6.7% in September 2021. The recent acceleration of inflation above the target of 5% prompted the NBM to raise the base rate three times from July 2021 by a total of 2.85 percentage points to 5.5% in October 2021. According to the EBRD experts, the stable macroeconomic position allowed receiving important fiscal support during the Covid-19 crisis. The current account deficit decreased from 9.3% of GDP in 2019 to 7.5% in 2020, mainly due to debt instruments, which made it possible to keep international reserves at a comfortable level. International reserve assets amounted to $4 billion in September 2021, covering more than 7 months of import. The relatively stable macroeconomic position prior to the Covid-19 crisis and access to $235 million from the International Monetary Fund's fast-track funding facility at the start of the Covid-19 pandemic helped the economy cope with the pandemic shock. Against the backdrop of an economic downturn and fiscal spending on a package of support measures aimed at mitigating the impact of the pandemic, the national debt increased from 28.3% of GDP in 2019 to 34.8% in 2020. The relatively low level of debt and the availability of external financing allowed Moldova get fiscal space for a comprehensive support package. Transition Report 2021-22 states that Moldova's economy is expected to recover in the short term, despite the uncertainty. EBRD experts predict that Moldova's GDP will grow by 7% in 2021, which will be facilitated by the recovery in global demand, and GDP growth in 2022 will reach 4%. Experts point out that the recovery of the Moldovan economy depends on the progress of the vaccination process and the restoration of consumer and investor confidence. As Moldova is integrated into the global automotive supply chain, the recovery path is likely to be similar to the overall recovery of the global economy. // 11.11.2021 – InfoMarket
