Moldava’s economy to contract, World Bank warns

8 Apr 15

Moldova is likely to slip into recession this year because of reduced foreign investment, slow growth in the European Union and economic and geopolitical trouble in Russia, the World Bank has warned.

The bank said it expected economic growth in the country to contract by 2% in 2015, adding that the recovery for next year would be slow.

It called on the Moldavian government to implement stronger reforms in the longer term, in all sectors of the economy to improve competitiveness and living standards.

In particular, it called for pension reforms to prevent the system from becoming an ‘economic deadweight’. It said the government’s current pension system paid insufficient benefits and provided weak incentives for savers to contribute.

The government should focus on restoring social sustainably of the pay-as-you-go scheme, which would provide space for future reform, it said.

Additionally, Moldova needed to acknowledge losses incurred by the state in the banking sector and take quick action to improve governance in order to minimise further risks. 

‘Russia’s economic downturn has affected Moldova’s remittances and government revenues. We expect economy growth in Moldova will go into a 2% recession in 2015,’ said Ruslan Piontkivsky, World Bank senior economist for Moldova.

‘We have also reduced the GDP growth forecast for 2016 to 1.5%.’

Moldova’s gross domestic product grew 4.6% in 2014, but has been slowing since the third quarter of last year.

  • Judith Ugwumadu
    Judith Ugwumadu

    Judith writes about public finance, public services and economics across Public Finance International and Public Finance. She previously undertook reporting stints at Financial Adviser, Global Security Finance and The Sunday Express.

Did you enjoy this article?

Related articles

Have your say

CIPFA latest