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The Economies on Both Banks of the Dniester Are Heading Towards Decline in Tandem

Wednesday, 17 February 20168311 views
The Economies on Both Banks of the Dniester Are Heading Towards Decline in Tandem

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

The economies on the two banks of the Dniester have grown closer recently as conditions worsened on both sides, though faster in the Transnistrian region than on the right bank. This is the finding of the latest issue of Transnistrian Economic Reality, a journal tracking economic and political developments in eastern Moldova.

The convergence indicator, where 100 means full convergence, rose to 97.8 in Q3 2015 from 90.3 in Q1 2014. The drivers were investment, external trade and inflation. Capital formation (excluding SMEs) fell by 20.3% in 2015. Exports dropped 15.9% on the right bank and 14.7% on the left, while imports fell 25% and 30.4% respectively. The national currency lost about 25% and inflation reached 9.7% on the right bank, whereas the left bank saw deflation of 1.1%.

Both economies share unsustainable growth models fed by dwindling external sources, small size, dependence on external markets and political instability. Adrian Lupușor, one of the authors, described a vicious circle and said authorities must change their behaviour, calling the 18 December 2015 decision to apply the DCFTA in the region a good sign.

View the original article in Romanian