The economic crisis in the Transnistrian region is becoming worse amid the reduction in internal demand, weakening of export activities and major political disagreements before the ‘presidential elections’, the independent think tank “Expert-Grup” says in the June edition of the publication “Transnistrian Economic Realities”, IPN reports.

The convergence indicator that determines the level of rapprochement between the two banks of the Nistru River in the second quarter of 2016 fell to 94.8% from 97.1% in the corresponding period last year. The Transnistrian economy, which shrank by 20% in 2015, does not show signs of recovery. Amid the dramatic reduction in the population’s incomes, including remittances, and the deficit of foreign currency, imports fell by about 1/3 in the second quarter of 2016 on a year before.

According to “Expert-Grup”, the high level of economic and social uncertainty in the region fuelled the emigration of capital to Ukraine and the right bank of the Nistru, while capital accumulation is to decrease by about 20%. “In the period, exports declined by about 5%, mainly owing to the maintaining of the fixing of the currency exchange rate of the Transnistrian rubble. This continues to erode the competitiveness of the region’s exporters.

The publication also says that the black currency market develops and the Transnistrian ruble there depreciated by up to 50% already. Owing to the deficit of foreign currency in the region and, respectively, to the reduction in imports, more people from the region have to travel to the right bank of the Nistru to make purchases.

In this connection, “Expert-Grup” recommends to urgently depreciate the Transnistrian ruble, in a controlled way, by about 15% by the end of this year and by another 25% in the course of 2017 and to adopt measures to stimulate investments so as to eliminate the black capital market and reanimate exports.