The economic development of Moldova this year can be affected by the uncertain regional situation deriving from the problems that arose between Russia and Ukraine, which are important trade partners of Moldova, said World Bank economists who made a study of the economic growth in Moldova in 2013 and the main challenges for this year, IPN reports.

Senior economist Ruslan Piontkisky and economist Marcel Chistruga said Moldova’s economy in 2013 reached a record GDP growth of 8.9% owing to the good harvest and the higher private consumption fueled by remittances and pay raises.

According to the co-authors of the study, the macroeconomic polices of Moldova were appropriate, while the monetary policies met the inflation target of 5%. Remittances reached a record level in 2013, owing mainly to the money sent from the CIS countries. At the beginning of this year, remittances declined following the slowdown in the economic activity in Russia. The foreign direct investments rose to 2% of the GDP. Real exports increased almost two times faster than the real imports. The country accumulated sufficient foreign exchange reserves for covering over five months of imports.

However, the economy continues to be vulnerable to the risks associated with a volatile external environment and to the challenges that affect the country’s financial sector. As a result, the commercial activity and the flow of remittances may shrink. The macroeconomic management may be upset in connection with the future parliamentary elections.

WB Country Director for Ukraine, Belarus and Moldova Qimiao Fan said that given the current external difficulties and the forecast slowdown in the performance of agriculture, the economic growth is expected to fall to 2% in 2014 and then to rise to 4-4.5% in 2015-2017. “In order to fully fructify the benefits of a solid economic performance and to reduce the external and internal risks, Moldova must continue to remove the constraints that affect the economic growth by improving the business climate, ensuring stability and the financial sector’s development, enhancing equity and efficiency of public spending and, most important, by improving governance,” he stated.

Since Moldova joined the World Bank in 1992, over US$1 billion has been allocated to 49 operations in the country.