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The political transition following the parliamentary elections in 2019 produced a major change of power that created preconditions for boosting the reforms’ agenda, but the fundamental weaknesses of the state of the country were not resolved yet.
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The Independent Think-Tank Expert-Grup in partnership with the Friedrich-Ebert-Stiftung is launching today, the 30th of September, in the framework of the 4th Edition of the Annual International Conference MACRO 2016, the State of the Country Report 2016.The experts ascertain that the Republic of Moldova, at her early age of 25th years of independence, is confronting one of the most acute crises in its short history. After the economic, currency and banking shocks of 2015–2016, Moldova has become more vulnerable than ever, entering a period of anemic economic growth, which could last for at least five years. Besides the external constraints, the fundamental cause aggravating Moldova’s economic condition is related to major governance failures in the recent years, intensified by the “brain-drain” phenomenon.
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Currently, Republic of Moldova deals with arguably the biggest challenge to its economic security since proclaiming the independence in 1991. The endemic corruption, oligarchization of state institutions, presence of suspicious foreign capital in the country’s financial sector and vulnerability of the decision-making process of governance, when it comes to lobby actions that are almost crossing the line of what is deemed legal, are the most weighty risks that exacerbate the country’s natural weaknesses. The State of Country Report 2015 has been launched by Expert-Grup together with Friedrich-Ebert-Stiftung at the MACRO 2015 Annual Conference.
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In 2013, the Republic of Moldova experienced an impressive economic performance: the 8.9% growth in the gross domestic product (GDP) was the highest in its modern history and places the country as one of the best economic performers in the region.Nevertheless, this improvement was primarily due to cyclical factors (recovery in the agricultural sector after the severe drought of 2012), with limited progress taking place regarding the main driving engines of economic growth. Investment activity and exports remained tepid, while the employment rate was low, revealing that the Moldovan economy reflects an unsustainable and non-inclusive development model.
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State of the Country Report 2013, which is a clear, evidence-based and objective analysis of the Moldova’s situation in eight areas: foreign policy, environment and natural resources, politics, technological, economic, human capital and demographic, social and socio-political. SCR 2013 will include also a special issue, which is Political Economy of Reforms in Moldova. The robust growth registered during 2010-2011 was jobless and kept the economy below its potential level. It points on the deficient growth model followed by the Moldovan economy, with scarce capital (investments), labor and technology. Hence, the business climate and export competitiveness remained overall weak. It led to raising current account imbalances at very challenging levels, whereas the primary source for financing this gap switched from FDI to foreign borrowings.
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What is the nature and the causes of economic development in the Republic of Moldova? As shown in this 2009 State of the Country Report, Moldova's geographic and natural endowment is not conducive to an effortless long term development. At the same time, poor and extremely scarce human capital congruent with the real economic needs, remains the key constraint undermining labor productivity. Within this context, it is crucial for Moldova to strengthen its market institutions so that to become the most attractive country for investors in the Eastern Europe. And because the institutional framework is also influenced by the political process and social order, it is important that various political parties and social groups, although holding divergent preferences, engage in peaceful discussions and go beyond one's boundaries regarding the alternatives that oppose them. Finally, Moldova's European aspirations still divide citizens in, at least two divergent camps, on the one side of the spectrum are those who favour the European option over the Eastern one and alternatively, on the other side are those that identify with the latter space rather than with the EU. All in all, this analysis points out to the need of a balanced and cautious approach both with regard to the foreign and domestic public policies, bearing in mind the overarching goal of European integration.
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