21 september, 2018

Specialists of the Expert-Grup independent analytical center presented a research "Economic Reality" at the Thursday's news conference at Infotag. The document includes the analysis of results in the Moldovan economy in the second quarter of 2018.

Center Director Adrian Lupusor said that the Early Warning Index (IAT), which is based on eight macroeconomic indicators, has been falling since July 2017 through May 2018, while in June and July 2018 it grew insignificantly.

"This dynamic slightly contradicts to the official data about the 5.2% economic growth in 2Q2018. The GDP growth corresponds with the Expert-Grup forecast, over a year it will account for 5%. The difference between the IAT and the GDP demonstrates the problems connected with the quality and the sustainability of the economic growth", he explained.

The expert said that despite the economic growth there are risks that can slow down the development in 2019, as the share of informal workers is growing (especially in rural areas), the credit activity is stagnating, as well as private investments.

Expert-Grup representative Alexandru Fala said that agricultural sector registered a considerable growth in the second quarter - 7.2%.

"All the industrial branches are registering growth: extracting industry (+8%), processing industry (+7.8%), energy sector (+5.8%)", he said.

According to him, the internal trade is also registering growth: wholesale trade grew 4.9%, retail trade - 6.4%, while services for the population - 9.7%.

"As for the prices and currency policy, two interesting trends may be noted: annual inflation stabilization at 3% during 4 months and national currency stabilization", the expert said.

Expert Vadim Gumene said that exports grew 25.8% in the second trimester, while imports - 25%. He also pointed at a favorable development of economy in Moldova's main trade partners - the EU (+2.2%) and Russia (+1.8%).

Center economist Iurie Morcotilo said that population income grew 8% in the second trimester due to growth of economy and inflation tempos, as well as the rehabilitation of remittances, but the strengthening of the national currency is eating up the entire growth.

"The dynamic of state budget fulfillment demonstrates a positive dynamic, as the revenues are growing faster than the expenditures. However, there is a risk that closer to the end of the year new election initiatives will be launched and will change the situation with budget revenues and expenditures, which in the end will lead to deficit. Improvement is registered in the field of population employment as well, its rate grew to 41%, while the level of unemployment is 3.5%. At the same time, the rate of informal workers reached its maximum over the last 10-12 years and accounted for 36%. This has a negative impact on the growth of economy and population revenues", he said.



Specialists of the independent analytical center Expert-Grup criticized the tax reform and the initiative on capital amnesty, as they think this threatens the state budget and the policy on combating money laundering.

Expert-Grup representative Alexandru Fala said at the Thursday's news conference at Infotag that these documents have passed the way from Government approval to President signing with a cosmic speed in comparison with other packages of bills.

"We cannot help noticing lack of transparency in this process. Any tax policy has both pluses and minuses. The implementation of a single income tax rate will bring benefit to all the population sections, but people with high incomes will feel the biggest benefit, which will lead to even a greater inequality", he said.

Expert-Grup Director Adrian Lupusor said that only in 2018-2019 the social insurance budget will lose 1.8 million lei, while the state budget - 600 million lei.

According to him, the law on capital amnesty has a number of risks, despite the fact that it is of higher quality than the one promoted in December 2016.

"The risks are connected with the fact that Moldova has a very fragile legislation in the field of combating money laundering and terrorism financing. We are just at the initial stage of its implementation, thus it is dangerous to implement measures that contradict the principles of combating the money laundering", he said.

The director stressed that a great problem of the amnesty is the short term of its action - only several months, while this will worsen the structures and banks' work on checking the source of funds and their legality.

"Moreover, the banks do not know so far how to check the funds, as the National Bank of Moldova yet has to develop an instruction with the description of concrete steps on checking the funds' provision. All this may lead to the fact that the legislation in the field of combating money laundering will be used formally", he maintains.

Lupusor said that this amnesty may become the world's most generous as its beneficiary should pay for this only 3%, which is much less than the income tax rate.

According to him, the civil society has to conduct a permanent monitoring of the amnesty execution, because such measures bring benefit only in countries where the corruption combating system is working well.

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