Independent experts do not share Government’s optimism about economic growth in 2009

Independent experts do not agree with the Government’s economic growth forecasts for this year, Info-Prim Neo reports. The consequences of the world financial crisis will affect both of the components of the Gross Domestic Product of Moldova – the gross value added and the net taxes on product and import, says the publication “Realitatea Economica” (“Economic Reality”) issued by the Analytical Center Expert-Grup. This is because the gross value added is directly proportional to the production volume. According to the publication, the first symptoms already appeared. The industrial output decreased significantly in the last quarter of 2008. The production volume fell mainly in the areas that form the key export category of Moldova following the lower demand in the importing countries. The production of textiles dropped 8.8%, of footwear and furs -14.9%, of canned fruit and vegetables – 0.6%, of mineral water and soft drinks – 16.6%, of tobacco products – 15.8%. The volume of services has also decreased. Experts say that the construction and transportation sectors will give the major blow. The Government counted namely on these sectors when it spoke about the improvement of the quality of economic growth, which, as national specialists and Moldova’s development partners, the IMF and the WB, ascertained during many years, is based more on consumption following larger remittances. The volume of construction works carried out on contract had decreased by about 10% in the last quarter of 2008. The volume of transported goods also fell. The slowdown in the growth of the gross value added will be marked by the rise in intermediary consumption, which increases at a higher pace than the production volume and the GDP. The rise in intermediary consumption stems from the increase in the consumer price index of the industrial production sold on the domestic market. The net taxes on product and import will be also affected because the demand on the home market and consumption in domestic households will decrease following the lower incomes of the population and the lower amounts of money sent home by the Moldovans working abroad. The experts say that these symptoms become more evident and can affect the economic growth in Moldova not only this year, but next year as well. The Government forecast that the GDP growth in 2009 will be 3.5- 4%. The Memorandum of Policies signed with the IMF projects a growth of 3.5- 3.6%. Moldova’s GDP last year had the following structure: about 61% of the growth was based on services and trade, 10% on agriculture, 15% on industry and the rest on other sectors. Speaking about these figures at a news conference last week, First Deputy Prime Minister and Minister of Economy and Trade Igor Dodon said that Moldova’s economy is based on services. The agriculture’s share of 10% would be reasonable, but Moldova is exposed to great weather-related risks and the agricultural sector is practically yearly affected by droughts, floods and hail. “Everything depends on the share of the processing industry in the given 10%. The reforms implemented in this sector at present are designed to increase the share of the processing industry and to diversify its products,” Dodon said.