The EBRD maintains the forecast of Moldova's GDP growth in 2024 at 3.5% and expects the Moldovan economy to grow by 3.7% in 2025.
Such data are given in the new, May Regional Economic Prospects published by the bank. According to EBRD experts, Moldova continues to struggle with the consequences of the war in Ukraine. In 2023, Moldova's GDP grew by 0.7% after a 4.6% decline in 2022. Output in the agricultural sector increased by 32% in 2023 after a similar decline a year earlier, while manufacturing, construction, transportation and trade continued to struggle. Private consumption and investment declined further, while net exports increased by 5.8%. Annual inflation, which peaked at 34.6% in October 2022, gradually slowed and was within the target range of 3.5% to 6.5% by the end of 2023. In February 2024, it stood at 4.3%. Successful disinflation allowed the National Bank of Moldova (NBM) to reduce the discount rate from 21.5% in August 2022 to 3.75% in March 2024 (since May 7, the NBM reduced the base rate applied to the main short-term monetary policy operations by another 0.15 p.p. - from 3.75% to 3.6% per annum). EBRD analysts point out that fiscal pressures have intensified as the authorities have strengthened social safety nets, including for a significant number of Ukrainian refugees, and introduced energy compensations for low-income households and subsidies for agricultural producers, resulting in an estimated fiscal deficit of 5% of GDP in 2023. External financing from official creditors of about $900 million in 2023 has helped mitigate the pressure from the growing fiscal and external deficits. The IMF approved the 4th review of the ECF/EFF program, allocating a tranche of $95 million, and extended the program until October 2025. According to EBRD experts, Moldova's GDP is expected to grow by 3.5% in 2024 and by 3.7% in 2025. At the same time, reforms undertaken for the country's accession to the EU may increase growth potential in the medium and long term, while geopolitical instability remains an important downside risk for the economy. // 15.05.2024 - InfoMarket.
