MEGA - Moldova Economic Growth Analysis № 18 / 2018
MEGA - Moldova Economic Growth Analysis № 18 / 2018

Author(s): Adrian Lupuşor, Alexandru Fală, Dumitru Pîntea, Iurie Morcotîlo, Vadim Gumene
Subject(s): National Economy, Economic policy
Published by: EXPERT-GRUP Centrul Analitic Independent
Summary/Abstract: National economy is approaching an unfavorable equilibrium, marked by low growth rates. In spite of favorable conditions (good agricultural year, re-launch of external assistance, increase in external demand and increase in remittances), the Gross Domestic Product grew by only 4.5% in 2017. This growth is not much higher than the 2016 evolution (+ 4.1%), when the situation was much more difficult, and is similar to the one projected for 2018-2019. These growth rates are below the potential levels and, given the current level of economic development, they are too low to ensure convergence in the western neighboring countries. Therefore, we find that economic growth stabilized around an unfavorable equilibrium, marked by low growth rates. These are due to two fundamental constraints: on the one hand, the population ageing trends diminish the population’s propensity to consume, which affects the main engine of economic growth at present, and on the other hand, the shortage of private capital does not allow for the replacement of consumption with a more sustainable economic growth engine. As a result, the potential GDP over the last few years has seen a steady downward trend, which is expected to continue during the next years, further undermining the growth rates.

• Details
• Contents