Moldova’s economy will inch up by only 0.3% in 2022 — after the 13.9% leap in 2021 — after which it will gradually accelerate up to a rate of 4.4% in 2025, according to the revised scenario drafted by the government of Moldova with a view to rewriting this year’s budget. 

The Ministry of Economy noted that there are still major risks and uncertainties regarding the evolution of the situation in the region, which may alter the forecast scenario.

Moldova's nominal GDP is expected to amount to MDL286.5bn ($15.2bn) this year.

The average inflation would reach 21.9% in 2022 (to then ease to 6.5% in 2023 and 5% in the following two years) but the local currency would weaken by only 7% with the year’s average exchange rate expected at MDL18.81 to the US dollar, according to the scenario drafted by the Ministry of Economy and published by Mold-Street.com.

The forecast was discussed with experts from the International Monetary Fund (IMF), during the visit of an IMF mission from March 9-16.

The scenario visibly assumes robust financial support from the country’s development partners. The country is negotiating larger loans attached to the programmes carried out by the IMF and Prime Minister Natalia Gavrilita will attend a conference organised in Berlin by France, Germany and Romania with the aim of consolidating the foreign support already expressed by Moldova’s foreign partners in the coming days. 

Faced with massive expenditures related to the refugees from Ukraine and shrinking revenues, the government expects the public deficit to near 10% of GDP.

"The sharp increase in foreign prices, the war near the border, the difficulties in international supply chains, which will temper external and domestic demand, are the main hypotheses underlying these projections," the document drafted by the Ministry of Economy reads.

However, some positive developments are expected in selected economic sectors: foreign financing is likely to spur on public investments while local producers may have a chance to substitute the imports no longer available from Ukraine and Russia.

Moldova's government expects investment activity to continue to grow, thanks to public infrastructure projects, financed mainly by its development partners.

Although constrained by rising production costs and possibly scarce raw materials supply in the context of the conflict in Ukraine, opportunities will appear for the industrial sector that may substitute the imports from the countries affected by the war, the Ministry of Economy argued on a positive note.

In the coming years (2023-2025), as the situation supposedly improves in the region, the ministry estimates that the economy will gradually recover and will register growth between 3% and 4.5%.

This scenario is based on the assumption that the war in Ukraine will not deteriorate significantly and the situation in the region will begin to improve, while the monetary policy of the National Bank will be focused on counteracting inflationary pressures and maintaining the stability of the national currency.