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Moldova: Economy Overview

09 February 2010
by Ina Dimireva -- last modified 09 February 2010

Moldova remains one of the poorest countries in Europe despite recent progress from its small economic base.


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Economy Overview

The Republic of Moldova enjoys a favorable climate and good farmland but has no major mineral deposits. As a result, the economy depends heavily on agriculture, featuring fruits, vegetables, wine, and tobacco. Moldova must import almost all of its energy supplies. Moldova's dependence on Russian energy was underscored at the end of 2005, when a Russian-owned electrical station in Moldova's separatist Transnistria region cut off power to Moldova and Russia's Gazprom cut off natural gas in disputes over pricing, and again in January 2009, during a similar dispute. Russia's decision to ban Moldovan wine and agricultural products, coupled with its decision to double the price Moldova paid for Russian natural gas, slowed GDP growth in 2006-07. However, in 2008 growth exceeded 7%, boosted by Russia's partial removal of the bans, solid fixed capital investment, and strong domestic demand driven by remittances from abroad. The country reversed course again in 2009, due to the onset of the global financial crisis and poor economic conditions in Moldova's main foreign markets, which dramatically decreased remittances. GDP fell about 9%. Unemployment almost doubled, and deflation has become a concern. Economic reforms have been slow because of corruption and strong political forces backing government controls. Nevertheless, the government's primary goal of EU integration has resulted in some market-oriented progress. The granting of EU trade preferences and increased exports to Russia will encourage higher growth rates, but the agreements are unlikely to serve as a panacea, given the extent to which export success depends on higher quality standards and other factors. The economy is likely to have a modest recovery in 2010, but remains vulnerable to political uncertainty, weak administrative capacity, vested bureaucratic interests, higher fuel prices, poor agricultural weather, and the skepticism of foreign investors as well as the presence of an illegal separatist regime in Moldova's Transnistria region.

GDP (purchasing power parity):

$10.21 billion (2009 est.)
country comparison to the world: 149
$10.93 billion (2008 est.)
$10.19 billion (2007 est.)
note: data are in 2009 US dollars

GDP (official exchange rate):

$5.328 billion (2009 est.)

GDP - real growth rate:

-6.6% (2009 est.)
country comparison to the world: 202
7.2% (2008 est.)
4% (2007 est.)

GDP - per capita (PPP):

$2,400 (2009 est.)
country comparison to the world: 177
$2,500 (2008 est.)
$2,400 (2007 est.)
note: data are in 2009 US dollars

GDP - composition by sector:

agriculture: 21.8%
industry: 17.6%
services: 60.6% (2009 est.)

Labor force:

1.336 million (2009 est.)
country comparison to the world: 135

Labor force - by occupation:

agriculture: 40.6%
industry: 16%
services: 43.3% (2005)

Unemployment rate:

2.6% (2009 est.)
country comparison to the world: 23
1.5% (2007 est.)

Investment (gross fixed):

24.5% of GDP (2009 est.)
country comparison to the world: 46

Budget:

revenues: $1.751 billion
expenditures: $2.112 billion (2009 est.)

Inflation rate (consumer prices):

0% (2009 est.)
country comparison to the world: 19
12.8% (2008 est.)

Commercial bank prime lending rate:

21.06% (31 December 2008)
county comparison to the world: 22
18.83% (31 September 2007)

Stock of domestic credit:

$2.406 billion (31 December 2008)
country comparison to the world: 91
$1.896 billion (31 December 2007)

Agriculture - products:

vegetables, fruits, wine, grain, sugar beets, sunflower seed, tobacco; beef, milk

Industries:

sugar, vegetable oil, food processing, agricultural machinery; foundry equipment, refrigerators and freezers, washing macines; hosiery, shoes, textiles

Industrial production growth rate:

-20% (2009 est.)
country comparison to the world: 165

Oil - production:

0 bbl/day (2008 est.)
country comparison to the world: 169

Natural gas - production:

50 million cu m (2007 est.)
country comparison to the world: 82

Current account balance:

$-611 million (2009 est.)
country comparison to the world: 113
$-1.015 billion (2008 est.)

Exports:

$1.24 billion (2009 est.)
country comparison to the world: 140
$1.641 billion (2008 est.)

Exports - commodities:

foodstuffs, textiles, machinery

Exports - partners:

Morocco 48.3%, Russia 15.2%, Romania 8.1%, Italy 5% (2008)

Imports:

$3.14 billion (2009 est.)
country comparison to the world: 138
$4.87 billion (2008 est.)

Imports - commodities:

mineral products and fuel, machinery and equipment, chemicals, textiles

Imports - partners:

Ukraine 20.6%, Russia 19.5%, Romania 14.6%, Germany 8.1%, Italy 5.1%, Belarus 4.3% (2008)

Debt - external:

$3.97 billion (31 December 2009 est.)
country comparison to the world: 110
$4.125 billion (31 December 2008 est.)

Stock of direct foreign investment - at home:

$NA (31 December 2009 est.)
$1.813 billion (31 December 2007 est.)

Stock of direct foreign investment - abroad:

$NA

Exchange rates:

Moldovan lei (MDL) per US dollar - 11.105 (2009), 10.326 (2008), 12.177 (2007), 13.131 (2006), 12.6 (2005)

Source: CIA - The World Factbook