Moldova’s economy registered a 3.9 percent GDP growth in the first half of 2014, driven by higher exports and fixed investments. Despite an unfavorable regional environment due to the Russia-Ukraine crisis, Moldova’s external position has remained strong, but downward risks to the macroeconomic framework persist and will negatively affect growth for the rest of 2014, says new World Bank Moldova Economic Update, quoted by IPN.
Moldova’s external position has remained strong and monetary policies have been consistent with the inflation target of 5+/-1.5 percent. By end-August, consumer prices increased 5.1 percent year-on-year. On the one hand, low growth in domestic consumption, good agricultural harvest and Russian restrictions on agro-food imports from Moldova contributed to disinflationary pressures. On the other hand, continued soft stance of monetary conditions and depreciation of national currency to USD and EUR counterbalanced the downward pressures on prices.
”Because of regional challenges and less favorable external demand and financing environment, we expect growth to slow down to 2 percent in 2014, down from 8.9 percent in 2013, and accelerate to 3-5 percent during 2015-2017,” said Ruslan Piontkivsky, World Bank Senior Economist for Moldova.
Main downside risks to the macroeconomic framework stem from external environment, fiscal pressures and weaknesses in financial sector. Prudent macroeconomic policies with low fiscal deficits and a flexible exchange rate subordinated to inflation target served Moldova well over the past years.
Since Moldova joined the World Bank in 1992, over US$1 billion has been allocated to 49 projects in the country. Currently, the World Bank portfolio includes 8 active projects with a total commitment of US$235.2 million. The International Finance Corporation has invested US$233 million in 24 projects in various sectors, and the Multilateral Investment Guarantee Agency has provided guarantees totaling US$95 million. Both institutions are members of the World Bank Group.
