The WB reduced the forecast of Moldova's GDP growth in 2024 by 2 p.p. - from 4.2% to 2.2%, in 2025 - by 0.2 p.p. – from 4.1% to 3.9%, and in 2026 expects the Moldovan economy to grow by 4.5%.
These figures were presented by the World Bank experts at a meeting of the Economic Press Club, which presented Moldova's economic prospects from the World Bank's new Economic Review. In particular, the WB experts expect that Moldova's GDP will amount to 321.3 billion lei in 2024, in 2025 - 349.7 billion lei, in 2026 - 383 billion lei, and GDP growth will amount to 2.2%, 3.9% and 4.5%, respectively. Average annual inflation is projected at 4.9% in 2024, 5.2% in 2025, and in 2026 - 5%. Moldovan exports are planned to grow by 4.5%, 5.1% and 5.1%, respectively, and imports by 4%, 4.1% and 4.1%, respectively, during this period. The share of external debt in GDP will decrease from 67.8% in 2024 to 67.2% in 2025 and 65.8% in 2026, while the budget deficit will decrease from 4.1% in 2024 to 3.4% in 2025 and 3.1% in 2026. The WB experts note that Moldova's economy is projected to grow by 2.2% in 2024, supported by an increase in real disposable income caused by low inflation and positive fiscal incentives. The gradual recovery will be driven by private consumption and investment, reflecting the recovery of the main sources of disposable income (wages, remittances and social transfers), low inflation and an adaptive monetary policy that will create favorable credit conditions. However, certain risks remain. Private consumption and investment growth may remain below historical averages due to high energy and food prices and lack of consumer and investor confidence. Net exports could have a negative impact on economic growth, as import growth is driven by a gradual recovery in domestic demand, on the one hand, and lower exports to CIS markets due to logistical problems, exacerbated by lower re-exports to Ukraine, on the other. On the supply side, growth in the services sector, especially in IT, transport and travel, and public services, supported by IT outsourcing opportunities and public sector modernization, is expected to contribute to growth in 2024. Growth in the industrial sector is expected to remain subdued, with output still below pre-war Ukraine levels due to weak external demand. Moldova's construction sector is noted to face challenges due to high material costs and uncertainty, while the transport sector will continue to benefit from the partial diversion of trade from Ukraine through Moldova, albeit in smaller volumes. The WB forecasts that the contribution of the agricultural sector will be limited, mainly due to high costs, logistical difficulties and productivity constraints. Economic growth in the medium term will be supported by a number of favorable factors, including reforms aimed at economic diversification and competitiveness, alignment with the EU accession agenda, positive fiscal stimulus and favorable interest rates. WB experts forecast that GDP will gradually approach its potential in 2025 as EU accession reforms accelerate. The services sector will be the main driver of growth, with IT and the public sector making a significant contribution. Supported by improving external demand and regional investment sentiment, the industrial sector is projected to recover gradually, with output reaching pre-Russian invasion of Ukraine levels in 2025. The food industry is expected to gradually recover in tandem with rising domestic demand, although it will face increasing challenges due to higher production costs and competition from neighboring countries. WB experts assess a moderate performance of the energy sector, characterized by significantly higher energy prices compared to levels before the COVID-19 pandemic. Authorities are planning large-scale energy efficiency measures, with a focus on infrastructure construction. Growth will be in predominantly export-oriented industries such as textiles, pharmaceuticals and electrical engineering. According to WB experts, the contribution of the agricultural sector will remain modest in the medium term, limited by productivity issues. // 15.05.2024 - InfoMarket.
