​MOLDOVAN GDP WILL SHRINK 2% IN 2015 AND WILL GROW 0.5% IN 2016 – WORLD BANK

The World Bank (WB) targets the deceleration of the Moldovan economy’s growth by 2% in 2015, its acceleration by 0.5% in 2016 and by 4% in 2017.

During Monday’s press conference “Moldova – current situation in economy and mid-perspective forecast”, experts of the WB representative office to Moldova said that the country’s economy will show shrinking of the GDP.

Among the main factors were voiced the following: draught consequences in agriculture, crisis in the banking sector, decline in labor migrants’ remittances, as well as decline in economies of the region’s countries, primarily in Russia, Ukraine and Belarus.

WB representative pointed at the fact that the slowdown in economy development has started much earlier: in 2014 the GDP grew by 4.6%, in 1H2015 – by 3.6%. For Q3 and Q42015 experts forecast the worsening of the situation, expecting that the lowest level of remittances from labor migrants will occur in the 4th quarter of 2015.

In general, the WB targets 1.3% decline in exports and 3.5% - in imports. The domestic consumption will fall 1.8% this year.

The bank expects that the GDP will account for 119.3 billion lei in 2015, in 2016 – 131.7 billion lei, while in 2017 – 144.4 billion lei.

According to the WB forecasts, exports, imports and consumption will start growing in 2016 by 3.7%, 2.8% and, respectively, 0.6% and by 4.5%, 3.8% and 3.6% in 2017.

Talking about the NBM’s tough monetary policy, when the refinancing rate reached 19.5%, while required reserve ratio from funds attracted in Moldovan lei – 35%, Alex Kremer, the World Bank Country Manager for Moldova, said that this is the result of the crisis in the banking sector, connected to the liquidation of three problematic banks.

He gave a positive assessment to authorities’ actions, in particular of the National Bank on transferring people’s deposits from the liquidated banks to other financial institutions.