EBRD predicts recession in Moldova in 2015, 2016 as risks persist

Chisinau, 6 November /MOLDPRES/- The European Bank for Reconstruction and Development (EBRD) sees the Moldovan economy contracting by 2 per cent in 2015 and stagnating in 2016, the Bank says in its latest Regional Economic Prospects report, published today.

EBRD prospects coincide with the estimations by the Moldovan Economic Ministry and the World Bank, which have recently revised downwards their prospects.

Downside growth risks are caused by “vulnerabilities in the financial sector, lower remittances, tight monetary policy, higher inflation, weak performance of agriculture, regional economic downturn, challenges in budget execution due to lower external financial assistance, volatile domestic politics and substantial governance challenges,” EBRD report reads.

European experts expect public debt to increase from approximately 30 per cent of GDP in 2014 to up to 50 per cent in 2015, mainly due to the emergency support to the three failed banks. 

According to EBRD experts, the outlook for economies where the EBRD invests, remains split, with countries further to the east weighed down by the Russian recession and weak oil and other commodity prices. The Ukrainian economy, for example, is now expected to contract by 11.5 per cent this year, a deterioration of four percentage points since the May outlook. In Russia, output is expected to contract by 4.2 per cent, while Romania will register a 3.5 per-cent economic growth.

The 2015 economic outlook in Eastern Europe and the Caucasus has worsened, affected by spill-overs from the recession in Russia and due to deeper recession in Ukraine and Belarus. 

In spite of its 3.6 per-cent growth in the first quarter, the Moldovan economy will enter a recession phase in 2015. The forecast two-per-cent shrink in its GDP in 2015, is “of course a regression for Moldova's development, and a quick launch of its economy in the next years would be probably a nice, but too optimistic scenario,” authors of the Moldovan Economic Trends study, launched by the National Institute of Economic Research, were recently stating.

Experts of the Expert Grup Independent Analytical Centre, in its latest Realitatea Economica (Economic Reality) economic publication, forecast a 0.5 per-cent decrease in the Moldovan GDP in 2015, against the last year. Their pessimistic forecasts state that Moldovan economy will contract by 2.5 per cent.

(Reporter V. Bercu, Editor L. Alcaza)