Moldova will be indirectly affected by slowdown in global economic growth, expert

The slowdown in the economic growth of the developed countries, projected by the World Bank in 2012, will affect Moldova, but rather indirectly than directly, considers economic expert and director of the Market Economy Institute Roman Chirca. Contacted by Info-Prim Neo, the expert said that there is certain legality in the world economic development, especially in the relations between the developed and developing countries. When there is a crisis, the investors withdraw from the developing markets and these markets develop much slower. “The present situation applies more to such developing countries as Brazil, India, Russia, and China. Moldova is somehow outside this system, given the particularities of the current crisis that is related to sovereign debts. Moldova did not make investments in these countries, did not buy bonds and is not directly connected. It is yet connected indirectly, trough exports, as the EU is its main commercial partner,” said Roman Chirca. He also said that we can speak about a future diminution in exports. However, there will be a certain growth trend. “In times of crisis, some of the products in developing countries become more competitive and we have an advantage in this respect,” said the expert. Roman Chirca stressed that Moldova’s economy depends greatly on remittances. 1/3 of the GDP consists of the money sent by the Moldovans working abroad. There are signals that the Moldovans cannot find a job in the countries to which they emigrated and two scenarios are possible – they will either not find where to work or they will find employment on a low salary. Both of the scenarios will lead to a decrease in remittances. In order to maintain a stable economic growth rate, the remittances entering the country must rise by 10-15% a year. “The Moldovans in Italy and Spain encounter difficulties in finding a job. Some of them return home. Many Moldovans migrate to Russia for seasonal work, especially in the construction sector. If this sector is hit by crisis, the remittances will fall as about 40% of them come from Russia. However, our citizens may be in demand for some works in Europe and Russia in periods of crisis and the economy may not be affected. I anticipate an economic growth of 1-2% in 2012, which is equal to stagnation,” said the expert. In its 2012World Economic Outlook, the World Bank says the developing countries must get ready for future diminution risks as the debt-related problems facing the eurozone and the slower growth in some of the large emergent economies affect the global growth prospects.