REAL ECONOMY No. 26: end of year on a pessimistic note for Moldova?

The Independent Think Tank EXPERT-GRUP released the “Real Economy” edition no.26, which analyzes the economic progresses of Moldova in 2011 and identifies the most important economic developments in the period January 2011 - February 2012. This issue analyzes a series of issues, including:

• “The European perspective”: yet achievable, but more distant. The Euro zone crisis is at its full scale and may bring about not only “introversion” of the European policy towards Eastern partners, but a Community “rethinking” regarding exclusive arrangements.
• End of year on a pessimistic note. The economic activity growth rate cools down significantly, and it has become so more clearly in Q4`11. The Government has taken note of the economic risks of 2012, as they already talk of a potential economic growth of 3%.
• Budgetary deficit: a missed target?  Despite low execution of the expenditures on NPB, under the planned level, the target for the budgetary deficit was not achieved. This will most likely reach a value of over 2.3% of GDP.
• Unemployed: fewer, but more poor. Early 2012 started with fewer new registered unemployed, more unemployed that have been placed on the labour market, less fired workers. At the same time, the expenses for unemployment benefit have decreased by 55%.
• Commercial Bank  ”Universalbank” bankruptcy does not have a systemic character. The bank`s financial difficulties are mainly related to its internal problems. However, the bank`s failure cannot affect the system, as it has a share of about 0.4% of the total banking system assets.
• The loose of monetary policy: causes and purpose. Declining inflation expectations and recession risks determined the NBM to reduce the interest rate for the main monetary policy operations in order to support the real sector crediting and thus to alleviate deflationary pressures.
• Important changes in Moldovan foreign trade. Exports proved a more pronounced growth pattern than imports in 2011, but there are few challenges Moldova hardly faces. What are these challenges?

This material/publication was developed by EXPERT-GRUP Independent Think-Tank with the support of the East European Foundation, based on the resources provided by the Swedish Government and by the Ministry of Foreign Affairs of Denmark/DANIDA by means of the Swedish International Development Cooperation Agency (Sida). The opinions presented in this document do not necessarily reflect the view of the East European Foundation, Swedish Government, Sida or Ministry of Foreign Affairs of Denmark/DANIDA.

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