Electoral race can turn into major constraint for economy, experts

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13:29, 25 Apr 2018

Electoral race can turn into major constraint for economy, experts

The electoral race entered by the Republic of Moldova this year can turn into a major constraint for the national economy during the next few years. At the same time, the modest growth rates with which the Moldovan economy meets the future electoral years will fuel a series of long-term economic risks, hampering further the convergence with the countries of Central and Eastern Europe. Such conclusions were formulated by experts of the independent think tank “Expert-Grup”, who estimated that in such conditions the economic growth this year will be of about 5%, IPN reports, quoting a press release of the organization.

“Expert-Grup” executive director Adrian Lupusor said the analysis of the economic growth risks in the past few years showed the Moldovan economy stabilized around an unfavorable balance marked by low growth rates. Population aging and insufficiency of private capital will obstruct the sustainable recovery of the national economy when the GDP follows a downward trend.

The think tank’s economists are also concerned about the impact of the structure of budget costs on the economic growth. The public budget during the last few years was rather social and was reactive to population aging, with the productive costs being on the wane. The public investments in infrastructure, health and education during the last few years grew slower than those intended for social protection. Thus, the necessity of fundamentally rethinking the budget spending polity becomes imperative for the sustainable development of the country.

According to the experts, the high level of fiscal discrepancy is another major constraint on the economic growth that undermines the public budget’s capacity to actively contribute to development. These, alongside the slowdown in the growth of labor productivity and salaries, will limit the economy’s growth potential next year.

The experts said that to stimulate the economy to optimal growth rates of 7-8%, the reforms to improve the business climate should continue in parallel with a series of policies that will increase investors’ trust in the state and in its economic prospects. A number of factors in 2018 will influence the high-quality economic growth, such as temperate inflation, favorable agricultural year, foreign assistance, growing remittances and others.

13:29, 25 Apr 2018
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