In 2021, the Republic of Moldova registers a solid economic return and growth in several areas such as foreign trade, agriculture, export of IT services. However, the significant rise in prices, especially for energy resources and food, is directly affecting citizens, and inflation will be high and at least in the first half of next year, experts warn.
The factor that most affected the economy of the Republic of Moldova in 2021 was the increase in prices for virtually all products and services, according to economist Veaceslav Ionita. He points out that annual inflation in 2021 will be almost 15%, the highest in 18 years. Rising prices, especially for energy and food, have affected virtually every economy in the world, the United States, for example, has the highest inflation in 40 years.
On the other hand, in 2021, the Republic of Moldova will record a record volume of foreign trade, which will exceed 10 billion dollars. Both exports and imports increased significantly. The downside is that the budget deficit will exceed $ 4 billion for the first time.
And agriculture will grow by about 30% after the recession caused by last year’s drought.
Another area that is becoming increasingly relevant is the IT sector.
In 2021, the Republic of Moldova will register exports of over 325 million dollars, more than two pores more than wine exports, and about five times higher than five years ago.
All in all, 2021 was a difficult economic year, just like the previous one, and the short-term outlook is quite bleak, according to Veaceslav Ioniță.
After the most severe recession in 2020, of 7%, for the current year an economic growth of about 8-9% is forecast, which will compensate the losses. However, the respective trend does not yet reveal a qualitative change of the economic growth paradigm, according to an analysis made by the economist from Expert-Grup, Adrian Lupușor.
The author notes the increase in budget revenues and the conclusion of a new gas supply contract on relatively favorable terms, but notes that the authorities have delayed negotiations. At the same time, the negative developments show an increase in inflationary pressure and budget deficit, the postponement of necessary reforms such as the territorial-administrative one, the worsening of the decision-making process and the reduced efficiency of some public institutions.
For the coming years, economic growth is expected to slow down. The economy needs systemic reforms and tangible progress in attracting infrastructure investments, high value-added activity and export potential, about Adrian Lupușor.
Among the major challenges that the Republic of Moldova will face in 202, experts mention the impoverishment of the population due to rising prices, the slowdown in economic growth, the risk of a new gas crisis, but also a new pandemic wave caused by COVID.
According to the Government’s forecasts for next year, the economy of the Republic of Moldova will grow by 4.5%. The budget for next year predicts an average annual inflation of almost seven percent, an increase of exports of more than 10%, imports – of 5% and an increase of the average salary in the economy by 10 percent compared to the current year.