Moldovan government lowered its GDP growth forecast for 2022 from 4.5% to 0.3%, and raised its inflation forecast from 6.9% to 21.9%.
Given this new forecast of macroeconomic indicators, agreed with IMF experts, the Ministry of Finance developed amendments to the Law on State Budget for 2022. The forecast was revised taking into account the economic impact of the Ukrainian refugee crisis, the crisis in the energy sector and rising prices for basic commodities. As noted by the Ministry of Finance, the main hypotheses that were taken into account in the revision of macroeconomic forecasts were: accelerated price increases in world markets, the war in Ukraine, difficulties in international supply chains, which will slow down external and domestic demand. At the same time, a slight positive evolution is expected in all areas. Investment activity is planned to maintain growth, thanks to public infrastructure projects financed mainly with resources from external development partners. The forced rise in production costs and risks of raw material supply in the context of the conflict in Ukraine will open new opportunities for the industrial sector, thanks to the reduction of imports from countries involved in the conflict. At the same time, large risks and uncertainties remain regarding the development of the situation in the region and the impact on the national economy, which may affect the forecasted macro indicators. According to the Ministry of Finance, GDP in nominal terms in 2022 is expected to be 273.5 billion lei instead of the previously forecasted 255.7 billion lei, and GDP growth is expected to be 0.3% instead of 4.5%. Average annual inflation is expected to be 21.9% instead of 6.9%, and year-end inflation will be 15.7% instead of 6.1% forecasted when the budget was drafted. The average annual exchange rate of the MDL to the USD is expected to be 18.81 per $1 this year instead of 18.77 per $1, and the exchange rate as of the end of 2022 is expected to be 19.13 per $1 instead of 19.21 per $1. In 2022, Moldovan exports are forecast to grow by 4.5% to $3 billion 286 million, while imports will increase by 6.9% to $7 billion 669 million. Earlier it was expected that exports would increase by 10.6% to $3.225 billion and imports - by 5.1% to $7.2 billion. The deficit of the foreign trade balance will amount to $4 billion 383 million instead of the former forecast figure of $3 billion 975 million. This year, the industrial production is expected to grow by 3.5% instead of 7.3% and to reach 81 billion lei instead of 74.4 billion lei in current prices. In the agricultural sector, production in 2022 is expected to drop by 2.5% to 55 billion lei instead of a 2.7% increase, to 41.3 billion lei. Also, investments in long-term tangible assets in 2022 are projected to increase by 5% to 32.7 billion lei instead of a 9.8% increase to 39.9 billion lei. // 15.04.2022 - InfoMarket
