The convergence index of the economies from the two banks of the Nistru River continues to decline owing to the modest performance of the Transnistrian economy compared with the economy on the right bank of the Nistru. According to the index calculated by the Independent Analytical Center “Expert-Grup”, the divergence became more prominent following the diminution of the industrial activity by 17.7% in 2013. As a result, exports fell by 15%, IPN reports.
According to the publication “Nistrian realities”, the industrial production on the right bank of the Nistru grew by 6.8%, while exports rose by 11%. The lower demand for energy resources and other raw material and the lower final consumption in the region led to a reduction in imports. On the other hand, the given processes were attenuated by certain convergence trends. Thus, the agricultural production in Transnistrian in 2013 increased by 85%, about two times more than on the right bank of the Nistru.
The Transnistrian economy remains very vulnerable to different shocks, both internal and external. Transnistria’s gross domestic product in 2013 grew by 2.4%, mainly due to the increase of over 2.3 times in the gross value added in agriculture and the 14.8% increase in the construction sector. The growth is not a durable one because the apparently impressive rise in agricultural production was due to the compensation of the losses sustained as a result of the 2012 drought. The construction sector developed based on the financial support provided by Russia.
At the same time, 2013 confirmed how sensitive and volatile the industrial complex of the region is to the internal and external fluctuations. In particular, the reduction in the industrial output in 2013 was due to the rise in prices of energy resources for companies, which led to the blocking of the most important companies of the region. The halt in exporting electricity to Romania in March led to a 25.9% reduction in the exports of energy resources in 2013.
The main immediate challenge faced by the region’s economy is the sustainability of the economic growth by diversifying and extending access to foreign markets. In 2013, Transnistria’s economy saw a current account deficit of about 80% of the gross domestic product. This points to reduced competitiveness and lack of durable growth stimuli. Therefore, cooperation in implementing the Association Agreement with the EU that will be signed soon is imperative for extending and diversifying the markets, increasing the region’s investment attractiveness and attenuating the risks associated with the worsening of the economic situation in Ukraine and Russia.
