The State of the Country Report, presented at the MACRO Conference, shows that the Moldovan economy is exhausting its potential, which makes it imperative to switch from the competition model based on low labor costs to the efficiency-based model. According to the executive director of the Independent Think Tank Expert-Grup Adrian Lupușor, for 2024 the report anticipates an economic recovery of about 2%, after the stagnation witnessed in 2023, thanks to the dynamization of domestic consumption and public investments.
"The Moldovan economy is exhausting its current and rather rudimentary model of competition, based on resources and low labor costs, and needs an important paradigm shift, but the transition to another model, based on efficiency, is slow and uncertain," said Adrian Lupușor.
An increase in this regard could be achieved by taking the opportunity offered by the European Commission's Moldova Growth Plan to the value of €1.8 billion, which can make a difference. This opportunity will allow the Republic of Moldova to switch over to a new economic model that will ensure a growth of over 5%.
"After 2022, the economy of the Republic of Moldova froze. It is human to understand it amidst the uncertainties caused by a border war. We need to accelerate economic growth because the 2-3% annual growth will continue to keep us in the ‘poorest country in Europe’ category," said Minister of Economic Development and Digitalization Dumitru Alaiba.
In 2024, the main risks came from the agricultural sector, where Expert-Grup anticipates a recession of 10%-15%. As for industrial production, stagnation or insignificant growth is forecast here.
Experts say that in order to improve the situation, access to capital must be facilitated and financial barriers that hinder the development of the business community must be eliminated. Increasing household incomes, expanding employment opportunities and strengthening social assistance systems are key to reducing vulnerabilities and promoting inclusive growth. According to the State of the Country Report, it is crucial for the Government to improve the efficiency of governance and to implement measures to support investment-based economic development.
