Moldova must transition to a new economic growth model based on higher added value

Economic growth potential has been eroding for a decade: average annual growth was 4.6% in 2004-2013 but only 2.2% in 2014-2023. Excluding the drought that damaged agriculture, 2024 growth would have been about 1.5%. The paper names three causes: worsening demographics and emigration of the working-age population, a shortfall of public and private investment, and weak governance that undermines state support programmes and the management of public investment funds.

The paper says the old model, based on low labour costs, produced low welfare and major imbalances in the current account, trade and budget. It should give way to one based on added value and productivity. It sets five strategic objectives: more efficient state support for entrepreneurs, a developed capital market, a smaller trade deficit, more and better public investment, and greater labour mobility and skills.