Moldova is experiencing a moderate economic recovery after a deep recession caused by the consequences of the war in Ukraine in 2022 - GET.
Experts of the German Economic Team (GET) stated this in their report on Moldova. According to the document, after a significant recession in 2022, Moldova's economy moderately recovered in 2023, with Moldova's GDP growing 2% last year, according to IMF experts, mainly due to an increase in agricultural production. Moldova's GDP growth forecast for 2024 is more optimistic and is expected at 3.9%, mainly due to the expected increase in private consumption against the background of lower inflation and the continued positive impact of a high harvest in 2023. The inflation rate returned to the target range, reaching 4.2% in December 2023, thanks to the successful policy of the National Bank of Moldova, the effective implementation of the NBM monetary policy and the fall in food and fuel prices. At the same time, the real appreciation of the Moldovan leu (MDL) poses a risk of decreasing international competitiveness. As GET experts note, strong inflation in 2022 led to a real effective appreciation of the MDL. The situation presents an ambiguous result: it benefits importers by making imports cheaper, but challenges exporters by increasing international prices for Moldovan products. The IMF estimates the overvaluation of the MDL at 20-25%, expecting a gradual adjustment in the coming years. Consequently, continuous monitoring of real exchange rates is crucial, as they significantly affect the competitiveness of Moldova's exports. Foreign trade in goods experienced a downturn in 2023, partly due to a decline in re-exports, although services exports remained strong. After a lower-than-expected budget deficit of 5% of GDP in 2023, the target deficit is scheduled to fall to 4.6% in 2024. According to GET experts, Moldova's macroeconomic situation has generally stabilized. Nevertheless, the economy is still looking for significant growth drivers. Moldova is experiencing only a moderate economic recovery from the deep recession caused by the consequences of the war in Ukraine in 2022. The ongoing war still has a significant impact on Moldova's economic landscape. Nevertheless, positive signs such as lower inflation and optimistic expectations for the upcoming harvest contribute to a cautiously positive economic outlook. // 07.03.2024 - InfoMarket
