The World Bank improved the GDP growth forecast for the Republic of Moldova in 2023 by 0.2 pp – from 1.6% to 1.8%, but maintained the economic growth forecast in 2024 at 4.2%.
This will be one of the smallest economic increases in the Europe and Central Asia region, which includes 23 countries.
At the same time, the World Bank estimates the growth of the gross domestic product of the Republic of Moldova in 2025 by 4.1%. The data is provided in the new Economic Outlook for the Europe and Central Asia region, published by the World Bank.
Previously, World Bank experts claimed that the economy of the Republic of Moldova was seriously affected by the war in Ukraine and by an increase in inflation.
Thus, in 2022 the country’s GDP decreased by 5.9%, while the average annual inflation reached 28.7%. BM experts emphasized that the Republic of Moldova suffered from the war, including the energy and migration crisis.
“Despite efforts to cushion the impact of the crisis through strong fiscal stimulus and fast monetary policy, private consumption was held back by falling household disposable income and private investment due to uncertainly and difficult financial conditions, sending the economy into recession in 2022”, they stated in an April 2023 report.
BM analysts also considered that the medium-term prospects of the Republic of Moldova will depend on the Government’s ability to mitigate the decline in household purchasing power, while maintaining the momentum of the reform program aimed at addressing low productivity growth, persistent structural and managerial deficiencies, of a large share of state-owned enterprises, stifled competition, an uneven playing field and tax distortions.
At the same time, they said that the risks of extreme weather phenomena and energy shocks remain high.
According to the World Bank, double-digit inflation in the Republic of Moldova will continue in 2023, falling only slowly towards the NBM inflation target of 5% (+/-1.5%) in 2024, subject to fluctuations in import prices and others effects.
At the same time, the external position of the Republic of Moldova was expected to worsen, reflecting a general increase in import prices, coupled with limited capital inflows due to increased uncertainty. In the medium term, remittance flows will stabilize as Moldovans abroad change their destination, which will contribute to reducing the structural current account deficit.
It should be noted that the World Bank’s forecast is still more optimistic than the EBRD’s, which estimated that the economy of the Republic of Moldova will register a 1.3% decrease this year, before growth returns in 2024.
For example, the Ministry of Economic Devepment and Digitalization estimates a 2.5% increase in GDP this year, the National Institute of Economic Research (INCE) anticipates that the economy will grow by 3.5% and the Expert Group claims that the economy of the Republic of Moldova will recover in 2023 and register an increase of 4.7%.