The perpetuation of the war in Ukraine is the biggest challenge for the Republic of Moldova in 2023, says a study conducted by the Independent Think Tank “Expert-Grup”. According to experts, the continuation of the war in the neighboring country and the probability of power outages will maintain uncertainty in Moldova at a high level, while a new refugee crisis will imply new costs for the state budget. Moreover, if the war continues, the prices of energy products will grow further, IPN reports.
According to the study, the continuation of the Ukraine war in 2023 will mean a new blow to Moldova’s economy as the commercial exchanges with Ukraine, the Russian Federation and Belarus will be further undermined and the logistical costs for companies that depend on imports will remain high. This will generate new price rises. The precarious economic situation will be deepened by the elections of 2023.
“The risk of electoral populism in the context of the local elections of 2023 can also cause impediments to the pace of system reforms. There is a risk that the economic potential will be undermined owing to emigration and disinvestment, especially if the security situation in the region does not improve. There is also the risk of new increases in the prices of energy products if the war in Ukraine perpetuates,” said “Expert-Grup”.
The experts also assessed the year 2022. According to them, the year was marked by stagflation or economic recession combined with high inflation. This led to a rise in the poverty rate and in social inequality. 2022 also saw positive events, with the obtaining of the EU candidate status by Moldova being the most important among these. Also, the external financial support increased and this enabled Moldova to diversify the purchases of electricity, to pay subsidies to vulnerable groups, to financially support the firms, to implement infrastructure projects and to maintain the stability of public finances. However, the challenges of 2022 didn’t enable the country to develop from economic viewpoint.
The decline in investment activity against the higher uncertainty and cost of doing business was a negative tendency of 2022, as was the slow pace of systemic reforms due to the multiple shocks, crises and emergencies that “captured” the Government’s agenda, notes the study.
