Moldova’s economic outlook deteriorated significantly following Russia’s invasion of Ukraine. Although the economy resumed growth in 2023, the pace has been slow, accompanied by an increase in poverty fueled by inflationary pressures. Ongoing challenges such as the war in Ukraine, structural problems and the upcoming elections continue to impose constraints that significantly affect consumer and investor confidence, says the World Bank’s latest Economic Outlook, IPN reports.
According to the WB experts, ensuring availability of and access to energy resources remains a short-term priority, given their potential impact on households, especially vulnerable ones, as well as on the country’s competitiveness and fiscal position. For all the inherent structural constraints, monetary and fiscal policies appear to be aligned in stimulating economic activity.
“The fiscal policy faces the twin challenge of supporting households’ real disposable income, while laying the foundations for future growth. However, a prudent approach to buffering and managing fiscal risks is needed. In order to achieve long-term sustainable development and aligning with the EU’s per capita income level, Moldova needs to engage in a comprehensive reform process and invest in infrastructure that promotes growth and is resilient to climate change,” says the Economic Outlook.
It notes that the structural challenges, such as productivity declines, skills mismatches, governance weaknesses and low levels of competition, persist and require reforms to boost competitiveness, remove barriers to the adoption of advanced technologies and improve market efficiency.
“The proposed reforms aim to accelerate public investment in infrastructure, implement a multimodal transport strategy and diversify the energy sector to reduce dependence on limited energy sources. Strengthening the public-private partnership framework, improving procurement strategies and attracting private investment are crucial for development. Changes in economic policies, along with institutional reforms, including subjecting state-owned enterprises to private company rules and promoting competition, are essential to stimulate productivity and investment growth,” reads the Economic Outlook
The experts also say that harnessing EU integration can boost private sector productivity, improve competitiveness and generate more job opportunities, thus committing Moldova to long-term economic growth. Efforts to access EU funds, especially for infrastructure, should be a key strategic objective for the future.
