Expert-Grup analytical centre says perpetuation of political instability risk factor for economic growth in Moldova

Chisinau, 30 May /MOLDPRES/ - The perpetuation of the political instability represents a risk factor which hits the investment activity and maintains suspended a string of programmes on behalf of development partners, economists of the Expert-Grup Independent Analytical Centre have said.     

During the presentation of the last issue of the Realitatea Economică (The Economic Reality) publication, launched today, the executive director of Expert-Grup, Adrian Lupusor, said that the instability dealing with the government’s formation “fuels a high level of uncertainty which is one of the principal dangers for the economic growth.”   

According to the expert, despite an economic stabilization, after a period of deceleration, in the second half of this year, the economic conditions might worsen. “In the first months of this year, we notice a certain change in the evolution of the Early Warning Index, quarterly calculated by Expert-Grup. Following a long period of decrease, the index changed its trajectory and started growing. Thus, more economic indexes monitored show certain positive developments, yet, risks persist,” Lupusor said.      

In particular, in the first quarter, the export of goods resumed its increase after a drop had been recorded in late 2018. Also, an acceleration of the crediting of the private sector is registered and in the context of the electoral campaign, the government increased the budgetary spending with certain positive, yet temporary, effects on consumption and economic growth. As a result, Expert-Grup anticipates that, in the first half of this year, a positive trajectory will be preserved; in the first quarter, the Gross Domestic Product might grow by about four per cent and in the second quarter, the economic advancement might exceed five per cent.    

At the same time, a string of risks persist for the economic growth, amid the external developments and adverse effects of the expansionist policies promoted by the government in the electoral context, experts noted. Starting from August 2018, the transfers of Moldovan migrants from abroad have been decreasing. The decrease in the inflow of currency, simultaneously with a high deficit of the balance of trade, triggered a depreciation of the national currency. The depreciation was boosted also by the increase in budgetary expenses, which stimulated the domestic demand, which prompted the increase in import and implicitly, of the deficit of the balance of trade, the publication also reads.    

The annual inflation rate, according to the publication’s authors, might increase up to 8-9 per cent till late 2019, according to the publication’s authors.

The Early Warning Index is made up by the aggregation of eight indicators: the average air temperature, quantity of precipitation, goods export, transfers to private people, new credits provided to legal entities, goods transport, collections from mandatory health insurances premiums, budget expenses.