Moldovan experts say economic situation in Transnistrian region continues worsening in 2016

Chisinau, 6 October /MOLDPRES/ – After a difficult economic year 2015, the economic situation of the Transnistrian region continued to worsen in 2016. The economic distancing both banks economies has continued for the fourth quarter consecutively, it is seen in the number of regular publication "Transnistrian Economic Reality" edited at the Independent Analytical Centre Expert-Grup.  

If in the 2nd quarter of 2016, the convergence indicator reached up to 97,1 per cent, in the 3rd quarter it dropped to 94,4 per cent. This involution, according to experts, is caused by deeper economic situation deterioration in the Transnistrian region compared to the one on the right bank.

The industrial production volume, which directly influence the dynamics of the GDP in eight months of this year was reduced by 2,3 per cent, the largest decline being attested in the 3rd quarter. Most of this decline is associated with compressing export activity on the background of weaker competitiveness of the Transnistrian exporters because of the weakened currencies of major trading partners of the region and maintain artificial "exchange rate of the Transnistrian ruble" and because of other external factors (difficult economic conditions in EU and CIS), assessed the authors of the publication.

Exports of goods and services on the left bank in eight months fell by 15,5 per cent. The volume of investments in fixed capital was 14,3 per cent lower than the same period the previous year. At the same time, reduced household incomes and remittances led to lowering of the demand in the region, the volume of retail goods and services in January-August went down by 5,2 per cent.

The economic and social crisis deepening in the region in 2016 emphasizes the need to promote more structural reforms. Basically, the region can no longer count on a cyclical recovery of the economy based on consumption or the reanimation of economic activity through traditional market of goods, labour and capital’s mechanisms. The only trigger for economic recovery of the region is to initiate deep reforms in at least three areas. First, taxation (revision of the mechanism of indirect taxation, in particular by introducing VAT) and currency (depreciation gradual "Transnistrian ruble" at least 30-35 per cent and revision of the mechanism for fixing the "exchange rate"). Another area to be reformed is foreign trade (the gradual removal of customs duties and other discriminatory trade practices, implementing the rules of origin of goods and implementing other basic provisions of DCFTA), pronounces the Expert Group.

(Reporter V. Bercu, editor L. Alcaza)