Independent Experts Draw the Attention to Risks Regarding Moldova’s Trade Deficit

Getting Moldova’s trade deficit over a certain „danger” limit might trigger an economic crisis, the economic analyst of the Participative Democracy Association (ADEPT), Iurie Gotisan, considers. In the first two months of this year, the trade deficit got to the figure of about 171 million dollars, 1.7-fold more than in the same period of the last year. In his opinion, and other analysts’ as well, the fact that this "gap" will continue to enlarge rapidly is not the worst thing that could happen. „The most important is not the deficit’s figure, but whether there exist certain funds to cover this hole or not.” According to Gotisan, many share the opinion that the abroad transfers could solve this problem. „Anyway the consistent currency remittances are rather short-term sources and beginning to have a decreasing tendency.” Huge problems are to appear if Moldova will not be able to attract foreign investments in conditions when big privatizations got to an end and the financial market opens to foreigners. The portfolio investments are now taken into account at a larger extent, meaning investments in governmental obligations, in shares of companies valued on capital market, in investment funds, etc. At the same time, portfolio investments are more „volatile” than direct foreign investments, as it is about money coming for profits. Reason for which they will stay here until they find what they want, Iurie Gotisan noted. „But if Moldovan economy will have any difficulties – thing that is not excluded, the volatile money invested into portfolio investments will flee the country. Then the current account deficit will become really dangerous. This could involve massive exchanges on currency, which could have disastrous consequences on the economy and on the fight of central banks with inflation”. The experts of ADEPT Association foresee for this year a "hole" of the current account about 9% of GDP, and as well investments over 350 million dollars. According to them, for a long-term, deepening without any control of deficits, misbalance between the capacity to export and the need of imported goods and services might lead to a risk. Risk noted as well by IMF representatives.