Moldova's GDP growth in 2021, according to IMF forecasts, will be 7.5%, and in 2022 - 4.5%.
This is stated in the materials of the International Monetary Fund, published following the Article IV consultation with Moldova. The IMF experts forecast that in 2021, the Gross Domestic Product of Moldova in nominal terms will be 232.5 billion lei ($13 billion in US dollar terms) and in 2022 - 255.6 billion lei ($13.6 billion). The average consumer price index is expected to be 4% in 2021 and 6.2% in 2022. At the same time, inflation at the end of 2021 is projected at 7.9%, and at the end of 2022 - 5%. IMF experts say the Moldovan economy is recovering from a sharp economic downturn in 2020, caused by the COVID-19 pandemic and drought. According to the forecast, in 2021, real GDP growth will reach 7.5%, fueled by strong domestic demand, supported by steady growth in loans and wages, as well as a significant inflow of remittances. Inflation in Moldova has accelerated due to a recovery in demand and rising energy and food prices. The budget deficit is projected to reach 5% of GDP in 2021 due to increased expenses related to overcoming the crisis. Public debt rose to 34% of GDP, and the situation of external sector accounts worsened due to rising global commodity prices and the revival of domestic economic activity. According to the IMF experts, the hard-won progress in transparency of Moldovan banks' shareholders, compliance of their owners with business and ethical requirements, as well as progress in effective bank governance has increased the resilience of the financial sector in the face of the ongoing crisis. Measures to protect the independence, financial autonomy and good governance of the National Bank have contributed to macrofinancial stability, while recent improvements in financial integrity have helped protect the financial sector from illicit financial flows. The IMF points out that despite significant progress, broad governance and structural weaknesses continue to impede sustainable improvements in the living standards of Moldovan citizens. Mechanisms to enforce the rule of law and fight corruption remain weak. Public expenditures are inefficient and not aimed at solving urgent problems, and infrastructure is of poor quality and at the same time inaccessible. High levels of emigration, especially among the more educated, continue to hinder the accumulation of human capital. The underdeveloped business environment limits private investment and productivity. Fund experts emphasize that downside risks continue to hamper forecasts. External risks include the more severe or prolonged effects of the global energy crisis, a weaker-than-expected global economic recovery, and the secondary effects of geopolitical tensions, which could have negative secondary effects on trade, capital flows, and remittances and complicate prudent policy. Domestically, risks include new waves of Covid-19 contamination and deterioration from renewed unemployment and business closures. Moreover, renewed political instability, opposition to vested interests, or reform fatigue could undermine trust, limit external funding opportunities, and exacerbate the loss of professional experience by key government agencies, further worsening Moldova's already weak implementation capacity. //22.12.2021 - InfoMarket.
