Moldova’s current account (CA) deficit widened by 14% y/y in the third quarter of 2021, to $400mn. The deficit in the four-quarter period ending September 2021 increased to $1.57bn, from $1.52bn calculated three months earlier. 

Compared to the previous four-quarter period (ending September 2020), the CA gap doubled — but this is because the gap narrowed during the lockdown period. Compared to 2019 (the last full year before the COVID-19 crisis), Moldova’s CA gap still widened by 41%.   

The country’s external deficit thus reached a new all-time record, both in absolute terms as well as compared to its GDP: the four-quarter CA gap accounted for 12% of the GDP over the same 12-month period ending September 2021. 

The net import of goods, typically large in Moldova compared to GDP as a result of robust remittances financing private consumption, increased by 16% y/y to $1.07bn in Q3 and by 30% y/y to nearly $4bn in the rolling four-quarter period ending September. The net imports in the 12 months ending September thus accounted for 30% of GDP. 

Wage remittances in the four-quarter period ending September (including transfers to households) remained below 14% of GDP but still financed 43% of the net import of goods. The remittances-to-GDP ratio has gradually declined from 16.4% in 2016 to 13.7% despite reaching a new record of $1.78bn in the four-quarter period ending September, up from $1.33bn in 2016.