Expert-Grup

Economic crisis in the Transnistrian region worsened by political decisions

Tuesday, 21 June 20166968 views
Economic crisis in the Transnistrian region worsened by political decisions

Automatically translated summary. The full article is available in Romanian.

The economic crisis in Transnistria is deepening amid weaker domestic demand, eroding exports and political divisions ahead of the “presidential elections”. The June 2016 edition of Transnistrian Economic Reality, prepared by Independent Think Tank “Expert-Grup” with EU funding and UNDP implementation, shows the Convergence Indicator falling to 94.8% in Q2 2016.

The indicator was 97.1% a year earlier (100 means full convergence) and has declined for four consecutive quarters. After a 20% contraction in 2015, the economy shows no recovery: imports fell by about a third, exports by about 5%, and capital accumulation is set to drop by about 20%. Fixing the “Transnistrian rouble exchange rate” continues to erode exporters' competitiveness.

The policy does not protect incomes. On the black market the rouble has de facto lost up to 50%, and residents increasingly shop on the right bank of the Dniester. The formal deflation of -0.2% reported in April thus becomes hidden inflation, with major consequences for poverty. Expert-Grup recommends a controlled depreciation of about 15% by year-end and a further 25% in 2017, together with active measures to stimulate investment.

View the original article in Romanian