The process of economic distancing between the economies from the two sides of the Nistru River continues for the fourth consecutive term. The rapprochement level in the second quarter of 2016 was 97%, while in the third quarter this decreased to 94%, shows a study carried out by the independent think tank “Expert-Grup”. According to experts, the involution was caused by a more profound deterioration in the economic situation in the Transnistrian region compared with that on the right side of the Nistru, IPN reports.
The study shows that after a difficult economic year in 2015, the economic situation in Transnistria continues to worsen in 2016. The volume of industrial production, which directly influences the dynamics of the Gross Domestic Product, in January-August fell by 2.3% compared with the same period last year. Experts say the reduction is mainly associated with the contraction of export activities amid the reduced competitiveness of Transnistrian exporters owing to the depreciation of the foreign currencies of the region’s trading partners and artificial maintaining of the exchange rate of the Transnistrian ruble.
Thus, exports of goods and services from Transnistria in the first eight months of this year declined by 15% compared with the corresponding period last year. The negative economic dynamics affected also the investment activity in the region. In January-June 2016, investments in fixed capital were by 14% lower than in the corresponding period last year.
The reduction in the population’s incomes and remittances led to a decline in demand in the region in January-August. Retail trade in goods and services diminished by 5%.
Experts consider the deepening of the economic and social crisis in the region in 2016 highlights the necessity of promoting more structural reforms. In essence, the region can no longer count on a cyclic recovery of the economy based on reanimation in consumption or economic activity through the classical mechanisms of the market of goods, labor force or capital. Only the initiation of profound reforms in at least three key areas – fiscal, currency and foreign trade - can stimulate the recovery of the region’s economy. The final goal of these reforms should be to open and diversify the economy and to increase investment attractiveness in the region.
