Moldovan experts expect economic downturn in 2015, slight recovery in 2016

Chisinau, 17 December /MOLDPRES/- The 2015 year was a very difficult one from the economic viewpoint, with most anticipated risks having been materialized. The Moldovan economy, based on consumption, has exhausted its resources, and authorities failed to ensure a switch to another more efficient economic model, according to a new MEGA report launched by the Expert-Grup Centre today.

Experts expect a 0.8-per cent decrease in 2015, triggered, in particular, by the decline from the third and fourth quarter and a pretty moderate 2.9-per cent recovery in 2016. “If we look closely at the way the GDP is formed, we will see that the only contribution to its rise was from the net export, in conditions of a higher decrease in imports. We have a more arithmetic positive effect on GDP,” Expert-Grup Centre’s director Andrian Lupusor said.

According to Lupusor, if the net export's factor was excluded, the drop is twice than the one reported by the National Statistics Bureau (BNS) - 3.7 per cent in the third quarter, which shows the seriousness of the economic situation in Moldova. 

“The main challenge of the Moldovan economy is that this economic crisis caught us quite unprepared, with a growing budget deficit, much above the optimal level of 1 per cent of GDP, quite low level of currency reserves, almost the minimum admissible one, and a weak banking sector”, Andrian Lupusor added.

Expert-Grup economists also say the key-institutions, which should intervene with a reliable anti-crisis plan, are "either paralyzed or in crisis of technical and financial capacities”. The economic and political uncertainty “affected very much the investment activity and long-term rise, as Moldova faces the situation in which the only long-term growth engine is productivity, and this depends on investments."

These major problems, according to experts,  might represent challenge in 2016 too, as the domestic demand is low, there is a difficult situation in the banking sector related to credit activity and cost of bank funding. Also, entrepreneurs’ expectations are very negative.

In the present conditions, the experts warn that very energetic measures are needed to overcome the crisis, all policies have to be coordinated and mechanisms for stimulating consumption should be applied. Also, the business climate and the relations with IMF must be improved. Expert-Grup also proposes to work out a law stabilizing the bank sector, that is weak, and the situation at the three banks under liquidation undermined confidence in banks.

According to BNS, in the first three months of this year, the advance was of 4.8 per cent against the same period of 2014, after which a contraction of the growth pace to 2.5 per cent followed in the second quarter and a 3.7-per cent decline in the third one. Official statistics also shows that, in the first quarter of 2015, the Moldovan economy recorded a 0.6-per cent drop against the fourth quarter of 2014, and in the second quarter - a 0.7-per cent fall against the previous quarter. The GDP's decrease in the third quarter means entering a technical recession.   

The Economics Ministry and World Bank forecast a 2-per cent economic downturn for 2015. IMF expects a one-per cent economic contraction, and IDIS Viitorul institute – a four-per cent one.

(Reporter V. Bercu, editor M. Jantovan)