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Economy of Moldova

From Wikipedia, the free encyclopedia

Economy of Moldova
Кишинёв. Новый банк..JPG
A bank in Chișinău
CurrencyMoldovan leu (MDL)
Calendar year
Trade organisations
WTO, GUAM, CEFTA
Statistics
GDPIncrease$9.556 billion (2017) (nominal)[1]
Increase$23.716 billion (2017) (PPP)[2]
GDP rank143rd (nominal) / 143rd (PPP)
GDP growth
-0.4% (2015), 4.5% (2016),
4.5% (2017e), 3.8% (2018f) [3]
Increase4.0% (2017)[4]
GDP per capita
Increase$2,694 (2017) (nominal)[1]
Increase$6,687 (2017) (PPP)[2]
GDP by sector
services: 64.8%; industry: 21.0%; agriculture: 14.2% (2017 est.)[5]
Negative increase6.6% (CPI, 2017)[6]
Population below poverty line
9.6% (2015)[7]
27.0 (2015)[8]
Labour force
Decrease 1.259 million (2017)[9]
Labour force by occupation
services: 51.0%; agriculture: 32.3%; industry and construction: 16.7% (2017)[9]
UnemploymentPositive decrease4.1% (2017)[9]
Average gross salary
Increase MDL 68,365 ($3,697), yearly (2017 average)[10]
Main industries
food processing, agricultural machinery; foundry equipment, refrigerators and freezers, washing machines; hosiery, shoes, textiles, sugar, vegetable oil.
44th (2018)[11]
External
ExportsIncrease$2.425 billion (2017)[12]
Export goods
foodstuffs, textiles, machinery
Main export partners
(2017)[12]
ImportsIncrease$4.831 billion (2017)[12]
Import goods
mineral products and fuel, machinery and equipment, chemicals, textiles
Main import partners
(2017)[12]
FDI stock
Increase$3.581 billion (2016)[13]
Negative increase$6.973 billion (2017)
Public finances
Positive decrease41.3% of GDP (2017)
Revenues$2.306 billion (2016 est.)[14]
Expenses$2.431 billion (2016 est.)[14]
Moody's (2018):[15]
B3
Outlook: Stable
Foreign reserves
Increase$2.903 billion (31 January 2018)[16]
Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars.

Moldova is a former Soviet republic in Eastern Europe. It is landlocked, bordered by Ukraine on the east and Romania to the west. The Republic of Moldova remains Europe's poorest nation.[17]

YouTube Encyclopedic

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  • Geography Now! MOLDOVA

Transcription

Hey everybody, so once again just like the last episode, I was stupid and I booked the wrong day at the YouTube space so this episode was filmed in my house. The audio quality is not gonna be as good, a black backdrop is totally visible. But hey, we got some good information in this episode. Oh and you can get one of these shirts: The blood of those who fight for the freedom Geographynow.com Anyway. Enjoy the episode. Imagine a person who speaks Russian, is Orthodox, eats borscht and lives in a state that is slowly trying to introduce market enterprise in a partial state-run system. Chances are, you're a Russian right? Nope, Latin. At least in Moldova. *Intro* It's time to learn Geography... NOW!!! Everyone, I'm your host Barb's. If you don't include microstates, Moldova is the European country with the least amount of visitors. And even then, Monaco, a microstate gets like three times more visitors. This episode is gonna be very fun. Because if you know me, I love diving into the obscure under-represented regions of the planet that need publicity boosts! So be honored, because today, you're about to enter the "Bob Saget of Europe". (Political Geography) Most people in the world probably won't be able to tell you where Moldova is on the map. If you can, congratulations, you're probably Moldovan First of all The country is landlocked, located in Eastern Europe, bordered by Romania to the west and Ukraine to the north, east and south. Yes, Ukraine, even took this one mile wide quarter on the Lower Dniester national park cutting off the closest access they COULD HAVE HAD to the Black Sea. The country is divided into 32 districts, with the capital and largest city, Chișinău, located in the south center of the country. In addition, they have three municipality citys: Chișinău itself being one, along with Bălți and Bender as well as two strange autonomous territorial units: Gagauzia and Transnistria, we'll talk more about these later. The country has only one main International airport: Chișinău International Otherwise Smaller uncertified or partially certified airports can be found in places like Bălți and Mărculești. Now after Chișinău, if you consider Transnistria part of Moldova, then the city of Tiraspol, their capital, would be the second largest one. Otherwise, Bălți would be next And speaking of which - let's just get it over with: What exactly are those two strange autonomous guys: Transnistria and Gagauzia? Well in the simplest way I can put it: Both of these places are a little more Russian influence from the rest of Moldova as if Moldova wasn't already Russian influence enough but to begin with but we'll talk about that later. Gagauzia is kind of like a more truly autonomous state in the fact that the people are culturally distinct with a Turkic Orthodox Christian background. They speak their own language, Gagauz Its split into four separate enclaves made up of these localities that have over 50% Gagauz populations including this small two-mile wide plot of farmland next to Carbalia. Even though they politically disagree with Moldova as in they've threatened that if Moldova tries to join the EU, they would opt out for independence and side with Russia. Regardless they are actually pretty chilled. You can visit and easily take pictures. See if you can get to one of those "Welcome to Gagauzia" signs on the road. Transnistria on the other hand is a little more tricky. They actually have declared independence in 1992, which has led to military conflict in the 90s after a ceasefire was established, they set up rules. But today it lies in a frozen conflict zone status. Today, they have their own government, militar,y police, postal system, currency vehicle registration. You even have to show your passport before crossing the border and with about a third of the population being Russian. It's no surprise that they side with Russia and have Russian peacekeepers to maintain the border security. Yeah, I know insert your opinion in the comments below. You can find lots of Soviet style symbols in their streets. In fact, they're the only state in the world that still uses the former USSR hammer and sickle in their flag. Russia: Whoa, we started that and even we don't have that anymore. Transnistria: Yeah, I'm just such a fan of your early work, you know! Some notable spots of interest might include places like: He's like the hero of the nation The sites of Old Orhei So many monasteries like these The State Circus in Chișinău And probably the most iconic landmark: the underground wine city of The Guinness world record largest wine collection in the world with over 120 kilometers of tunnels and corridors. Yeah, they love wine. Let's talk more about resources and such in: (Physical Geography) Now if you don't know anything about Moldova's land. One thing you definitely should know is: WINE. Most houses in the countryside and even some of the cities have wine cellars. It's kind of like what saunas are to Finland. Finland: Huh. great analogy. Yeah, I get it. First of all Moldova's land is mostly situated between the two longest rivers of the country: The Prut which makes up the entire western border with Romania and the Dniester with Ukraine But then was Transnistria a series of arbitrary lines through flat farm fields goals passed the river. Hence, where the name Transnistria comes from, "Across the Dniester". The country is made up of small short forested hills cut by numerous creeks and rivers. The tallest point being only 430 meters high, Bălănești hill and all of which are part of the Moldovan plateau which extends into the larger Carpathian mountain chain. The largest natural lakes would be either the Manta and the Beleu, located right on the border with Romania. And right at the very southernmost tip of Moldova, they have a small 200 metre coast with the Danube and their only shipping port with access at Giurgiulești which is essentially the only indirect point of access they have to the Black Sea which is kind of important. All right, animation is done. So you know what that means? That means is it time for my triple shot of espresso break. Noah takes over as co-host in this segment so I don't end up losing my voice before this episode is over. But the man, I think you have a problem. Don't care, take it away! About half the country is arable and chances are no matter where you travel, you will find a vineyard. As mentioned before, Moldova takes wine very seriously. And for a nation as far as they are on the world stage, it's amazing they've ranked 12th in wine production. They even have a holiday to celebrate it Their lush landscape is home and various animal species like Brown bears European hares Minxes Great egrets White storks And the national animal: the Oryx You can even find it on their coat of arms. Just north of the capital, you can find one of the largest gypsum caves in the world containing over 20 underground lakes. Food-wise, they pretty much follow the same format as Romania. You have things like: You'll notice everything kind of has a Slavic twist to it. Lots of sour cream added to soups. Borscht, a sour tasting soup is popular as well as pickled vegetables. Economy-wise, things really changed up after independence from the Soviet Union Paid policy changed and for a while, they had a huge inflation rate after switching currencies Today, they are classified as the poorest country in Europe in terms of GDP per capita. And to address if they had to switch up a few things. One thing they did was they greatly lose the foreign investment barriers to pretty much anything as long as it didn't go against the interest of national security in order. Also purchasing agriculture in forested lands are forbidden. Even so, not much changed and it's partially because Well, it kind of went like this: Moldova: All right, independence! Ready to take on the world! Sweet. So what are you gonna do now? You're gonna open up a market economy? Moldova: Yes... Technically... I mean, you know, I'm still gonna lie kind of haven't really regulate wages and prices and add a few legal restrictions. But yes! Privatization and whatnot. Okay. In that case, when are you going to announce this globally? Moldova: Ehh, we'll get to that later. First I need some wine. Yep, Moldova kind of lacks in the PR department for now. Otherwise there is a slow but steady overall growth, but it's always kind of hindered by domestic problems Looks like a great time to discuss more of that, in: (Demographics) Thank You, Noah! Follow him on Instagram. Now it really does kind of seem like in order to understand Moldova, You kind of have to understand Romania first because it's so important. But alas, these videos are done alphabetically. So sorry Romania: I shouldn't name myself "Lomania" Chinese: Someone said Lo mein? Getting off topic. Anyway, including the disputed autonomous regions of Gagauzia and Transnistria, Moldova has about 3.3 million people and has seen a decline since the peak at 3.7 in 1992. The country is made up of about three-quarters that identify as Moldovan and 7% Romanian, but in all honestly, they're pretty much the same people. After that, there is a noticeable Ukrainian minority at about 6.6%, Gagauz at about 4.6%, and the rest are mostly Russian, Bulgarians, Romani and other groups. They use the Moldova leu as their currency. They use the type C plug outlet and they drive on the right side of the road. Now what exactly is a Moldovian? Well in the shortest simplest way I can put it: Unless you talk to want to one of the incredibly nationalistic ones that will start a debate: They're basically Romanians. They speak pretty much the exact same language except the Moldovan might use a few Russian slang words here and there but essentially they're pretty much just speaking the same thing. For those who don't know, the Romanian language is actually a Latin based Romance language related to French, Italian and Spanish. It is the easternmost Romance language in Europe. I've heard stories from Latin Americans and Romanians meeting each other. They're kind of like "Hmm, I kind of understand a bit of what you're saying." Where they differ though would be politics and history. This is kind of what separated them. Very so much of what happens at the Koreas, remember those episode. My mom was in one of them. Essentially even though they were part of the Warsaw Pact, Romania never became a Soviet republic whereas Moldova did and then they kind of became somewhat Russia-fied. Eventually, Romania leaned more towards capitalistic interests and eventually joined the EU. Moldova never did. So basically, what you have are two siblings that were brought up in different schools and taught very different lessons from the two drastically different faculties. Today, most Moldovans are bilingual with Russian and you can still see hints of the Soviet past and influence. But like it's 50 times stronger in Transnistria. They are like turbo-Russia fans! One way you can see the influence for example would be the fact that Over 90% of the nation, to varying degrees of devotion, identify as being part of the Orthodox Church. Nonetheless, they still held on pretty well to their roots. They have a plethora of traditional Moldovan folk arts and music. Ancient ballads like these. They have a holiday in July where everyone just kind of puts on a culture show. Moldovan ceramics and weaving culture has always been a trademark of the country's identity. Keep in mind They also have a noticeable Gypsy or Roma community especially in the town of Soroca. They even have a "King of gypsies" This guy, he acts more of like a communal facilitator rather than an actual ruler. It's interesting though, because no matter how hard the Slavic culture has tried to permeate through their populace, They just could not let go with their passionate Latin roots. Moldovans have always kind of had like a little bit of a humor aside. They don't mope around and let life or struggle get to them. They love it when anybody notices them and when they do they don't hesitate to put on the show especially when it comes to Eurovision Wow They celebrate harvest festivals, a car-free day, a huge music festival in March. Anyway, we go on and on but we got to discuss the history. In the quickest way I can put it: The Trypillia culture The Dracians The Romans Bulgars, Hungarians and other tribes invade Mongols came by Turks come in Stephen the Great, the hero of the nation wins 44 battles They end up becoming an Ottoman vassal state Russia comes in and annex what they called Bessarabia After WWI, Romania came in they unified After WWII, the Soviet Union came back in They become a Soviet republic Moldova becomes very Russianised until 1991 independence The Dniester war with Transnistria Scandals, protests. They can't figure out who they want as a president for like three years, And here we are today. Now I ask some of you guys, the Moldovan Geograpeeps to give me a list of some of the most famous Moldovan people in your opinion and here's some that you mentioned: The guy who made that Numa Numa song They said he kind of "counts". Alright. Cool people and even cooler ties to the rest of the world. Which brings us to: (Friend Zone) Yes, Europe's most obscure nation, Moldova has always kind of wanted to break out and show the world what they're made of. First of all They get along with many of the other former Soviet states, especially the Caucasus ones like Armenia Azerbaijan and Georgia. Although business isn't that strong between them, They still love to share stories whenever they visit each other. Ukraine is probably the closest one though as they are a major trade and import partner. Many Ukrainians live in Moldova and they've been key players in their history. Now since independence, Moldova has always kind of been in between a tug of war match between Russia and the EU. Recently Moldova has expressed a great desire to join the EU and follow the footsteps of their brothers, Romania and preference have been waning towards their former Empire rulers accepting Transnistria and Gagauzia. And whenever Moldova becomes a little too European, Russia tugs harder at these two areas which kind of keeps Moldova in a slight limbo state diplomatically In terms of their best friends though, almost every single Moldovan I talked to has said the same country: Romania It's not even a friendship. It's literally a family. These two countries understand each other better than anyone else and despite the small differences, they are one blood. Many people have family in each country. They share the same language, stories food, and weird Eastern Latino culture. In conclusion: Moldova is like a heavily Slavic influenced Orthodox Latino nation with two strange breakaway children. But when it gets a little too much for them to handle, they just sit down and sip the wine. Stay tuned, Monaco is coming up next!

Contents

Background

On January 2, 1992, Moldova introduced a market economy, liberalising prices, which resulted in huge inflation. In 1993, a national currency, the Moldovan leu, was introduced to replace the Soviet ruble. The economic fortunes of Moldova began to change in 2001; since then the country has seen a steady annual growth of between 5% and 10%. Remittances from Moldovans abroad account for a quarter of Moldova's GDP, one of the highest percentages in the world. However, Ion Marandici claims the high level of remittances did not lead to development.[18]

Overview

Moldova's proximity to the Black Sea gives it a mild and sunny climate. The fertile soil supports wheat, corn, barley, tobacco, sugar beet, and soybeans. Beef and dairy cattle are raised, and beekeeping is widespread. Moldova's best-known product comes from its extensive and well-developed vineyards concentrated in the central and southern regions. In addition to world-class wine[citation needed], Moldova produces liqueur and sparkling wine. It is also known for its sunflower seeds, walnuts, apples, and other fruits. This makes the area ideal for agriculture and food processing, which accounts for about 40% of the country's GDP.

GDP by sector, 1989, 1999 and 2015
GDP by sector, 1989, 1999 and 2015
A chart of Moldova's export products, 2013.
A chart of Moldova's export products, 2013.

Moldova has experienced economic difficulties, like many other former Soviet republics. Since its economy was highly dependent on the rest of the former Soviet Union for energy and raw materials, the breakdown in trade following the breakup of the Soviet Union had a serious effect, exacerbated at times by drought and civil conflict. The Russian ruble devaluation of 1998 had a deleterious effect on Moldova's economy, but economic growth has been steady since 2000.

Moldova has made progress in economic reform since independence. The government has liberalized most prices and has phased out subsidies on most basic consumer goods. A program begun in March 1993 has privatized 80% of all housing units and nearly 2,000 small, medium, and large enterprises. Other successes include the privatization of nearly all of Moldova's agricultural land from state to private ownership, as a result of an American assistance program, "Pamînt" ("land"), completed in 2000. A stock market opened in June 1995.

Inflation was brought down from over 105% in 1994 to 11% in 1997. Though inflation spiked again after Russia’s 1998 currency devaluation, Moldova made great strides in bringing it under control: 18.4% in 2000, 6.3% in 2001, and 4.4% in 2002. In 2003 inflation escalated again – due mainly to a drought-driven rise in agricultural prices – reaching 15.7%, although it was reined in to 12.5% in 2004. The local currency appreciated considerably in 2003 and the first months of 2004. By May, the leu had reached its highest level since the end of 1999. After the National Bank of Moldova increased considerably its purchases on the foreign exchange market, the leu stabilized in November–December 2004 at 12.00-12.50 to the US dollar.

Moldova continues to make progress toward developing a viable free-market economy. The country recorded its fifth consecutive year of positive GDP growth in 2004, with year-end real GDP growth of 8%. This growth is impressive considering that, prior to 2000, Moldova had recorded only one year of positive GDP growth since independence. Budget execution in 2004 was also impressive, as actual consolidated budget revenues exceeded projections by 1.4% for most of the year.

Privatization results in 2004 were not significant: several smaller companies and one winery were privatized in 2004, but the government postponed indefinitely the privatization of several larger state enterprises, including two electricity distribution companies. Sporadic and ineffective enforcement of the law, economic and political uncertainty, and government harassment and interference continue to discourage inflows of foreign direct investment.

Imports continued to increase more rapidly than exports during the first nine months of 2004; Moldova’s terms of trade worsened, as higher-priced energy imports outpaced the value of Moldova’s main exports—agricultural and agro-processing goods.

During 2002, Moldova rescheduled an outstanding Eurobond, in the amount of $39.6 million, to avoid a potential default. In May 2004, Moldova redeemed promissory notes with a total value of $114.5 million to Russian Gazprom for just $50 million. Moldova informed its bilateral creditors in mid-2003 that it would no longer service its debts. The 2004 budget did provide funds for external debt service (interest) at some 6% of the government budget, the 2005 budget projects external debt service at some 4%. The International Monetary Fund (IMF) and World Bank resumed lending to Moldova in July 2002, and then suspended lending again in July 2003. Although Moldova passed a poverty reduction strategy in 2004, it has yet to reach an agreement with international financial institutions.

70% of total electrical energy power consumed in Moldova is imported from Ukraine and only 30% is produced in Moldova.

Macroeconomic situation

As a whole, Moldova is doing well, despite a series of consecutive shocks, which included the doubling of the price of imported natural gas and Russia's ban on imports of Moldovan wine in 2006, and a severe drought in 2007. Growth is estimated at 5 percent in 2007 and is projected to increase to 7 percent in 2008. Investment is picking up, and is beginning to replace remittances as the main source of growth—an encouraging sign that the earlier model of consumption-driven growth is changing.

Moldova increasingly faces the challenges experienced by other transition economies. Improved growth prospects have come with strong appreciation pressures from foreign exchange inflows, and a widening trade deficit. Foreign direct investment (FDI) has picked up and is estimated to have reached 12 percent of GDP in 2007, compared with 7 percent in 2006.

The main macroeconomic concern is inflation, which at 13 percent remains high for the region.

A deterioration in the merchandise trade balance due to strong import growth has been offset by improvements in net income and transfers, with a small improvement in the current account deficit to 12 percent of GDP. A resumption of wine exports to Russia in October was a major positive development, although volumes are likely to recover slowly.

Fiscal policy remained tight, ending 2007 with a modest deficit of 0.3 percent of GDP. Strong revenue performance was driven by robust VAT on imports, while expenditure was kept in line with the budget. However, the tax cuts introduced in 2008 may undermine the favorable fiscal position.

Monetary tightening in 2007 was complicated by the strong inflow of foreign exchange. The National Bank of Moldova increased reserve requirements from 10 to 15 percent, and raised policy interest rates by 2.5 percentage points. Nevertheless, the possibility of second-round effects from the drought, liquidity pressures from growing remittances and FDI, and the continued strong growth in credit and broad money suggest that upside risks to inflation are not yet fully contained.

In spite of some favorable background, the Republic of Moldova remains Europe's poorest nation, resisting pursuing the types of reforms that have vastly improved the economies of some of its Eastern European neighbors. The Communist Party retained political control after winning the March 2005 parliamentary elections and re-elected its leader, Vladimir Voronin, as president in collaboration with the opposition. Although the government maintains a pro-Western stance, it has had trouble pursuing structural reforms and has made little progress on the International Monetary Fund's program to attract external financial resources. The parliament approved the government's economic growth and strategy paper in December 2004, but international financial institutions and Western investors will not be satisfied until the government begins to address fiscal adjustment, wage restraint, and payment of debt arrears. Despite the fact that the pace of privatization and industrial output has slowed, GDP growth was 7.3 percent in 2004, consumption continues to grow, and the currency continues to appreciate. The impasse in the pro-Russian Transnistria enclave, plagued by corruption and the smuggling of arms and contraband, continues despite international attempts at mediation.

Business and Economic Environment

According to the 2018 Index of Economic Freedom, Moldova ranks 105th globally with the overall score of 58.4, an increase of 0.4 relative to 2017.[19]

Rule of Law Regulatory Efficiency Government Size Open Markets
Parameter Score Change in Yearly Score from 2017 Parameter Score Change in Yearly Score from 2017 Parameter Score Change in Yearly Score from 2017 Parameter Score Change in Yearly Score from 2017
Property Rights 53.5 3.9 Increase Business Freedom 66.0 0.1 Increase Government Spending 56.7 1.9 Increase Trade Freedom 78.3 1.7 Decrease
Government Integrity 26.6 2.0 Decrease Labor Freedom 39.9 1.0 Increase Tax Burden 85.3 0.8 Decrease Investment Freedom 55.0 0 Steady
Judicial Effectiveness 26.3 2.4 Increase Monetary Freedom 73.2 1.2 Increase Fiscal Health 90.0 0.6 Decrease Financial Freedom 50.0 0 Steady

*Everything above 60 is considered to be Moderately Free.


According to the 2019 Ease of Doing Business Index, Moldova's Distance to Frontier is 73.54/100 (47th globally), an increase of 0.38 relative to 2018.[20]

Ease of doing business, 2019
Parameter DTF
Starting a Business
95.55% Increase
Dealing with Construction Permits
52.19% Increase
Getting Electricity
74.88% Increase
Registering Property
82.62% Increase
Getting Credit
70.00% Steady
Protecting Minority Investors
68.33% Steady
Paying Taxes
84.55% Steady
Trading Across Borders
92.32% Steady
Enforcing Contracts
60.87% Steady
Resolving Insolvency
54.12% Increase

*DTF (Distance to Frontier): Higher is better

Trade policy

According to the World Bank, Moldova's weighted average tariff rate in 2001 (the most recent year for which World Bank data are available) was 2.8 percent. (The World Bank has revised the figure for 2001 downward from the 3.9 percent reported in the 2005 Index.) A 2004 World Bank report notes a "range of informal barriers to both imports and exports in Moldova, such as cumbersome and restrictive trade procedures, corruption, burdensome and inappropriate regulations and high transport costs." Based on the revised trade factor methodology, Moldova's trade policy score is unchanged.

Free Trade Agreements

Currently Moldova has signed multilateral and bilateral Free Trade Agreements with 43 countries.

Agreement Signed Entry into Force Comment
Moldova–Azerbaijan FTA 1995 1996
Moldova–Georgia FTA 1997 2007
CEFTA 19 December 2006 28 July 2007
CISFTA 18 October 2011 9 December 2012
DCFTA 27 June 2014 1 July 2016 Provisionally applied 1 September 2014 – 1 July 2016
Moldova–Turkey FTA 11 September 2014 1 November 2016
Moldova–China FTA[21] Under Negotiation

Regional developments

Countries tend to benefit from sharing borders with developed markets as this facilitates trade and development. Below is a table of Moldova's neighboring countries, their GDP per capita in 1990 and 2015, and trade values between the pairs. Their evolution is distinct as Romania went from a GDP per capita which was only about a third larger than that of Moldova's in 1990 to one which in 2015 is more than three times as large. Ukraine on the other hand decreased its advantage over Moldova by almost 6pc. This is evident in trade as the value of exports to the Ukraine is only about 10pc that of exports to Romania.

Country GDP per capita,
PPP (current international $) 1990[22]
Difference
in GDP PPP (%) in 1990
GDP per capita,
PPP (current international $) 2016[22]
Difference
in GDP PPP (%) in 2016
Exports to
US millions (2016)[23]
Percentage
of total exports[23]
Imports from
US millions (2016)[23]
Percentage
of total imports[23]
Romania 5,504 32.2 23,626 342.2 513.1 25.1 555.5 13.7
Ukraine 6,780 62.9 8,272 54.8 49.7 2.4 383.9 9.8
Moldova 4,162 5,343

Fiscal burden

Moldova's top income tax rate is 22 percent. The top corporate tax rate has been cut to 18 percent from 20 percent, effective January 2005. In 2003, government expenditures as a share of GDP increased 1.2 percentage points to 33.6 percent, compared to the 3.0 percentage point increase in 2002.

Government intervention

The World Bank reports that the government consumed 17.7 percent of GDP in 2003. In the same year, based on data from the International Monetary Fund, Moldova received 4.93 percent of its revenues from state-owned enterprises and government ownership of property.

Monetary policy

Between 1995 and 2004, Moldova's weighted average annual rate of inflation was 11.99 percent.

Foreign investment

The Moldovan government does not maintain many formal barriers to foreign investment, and the Moldovan embassy reports that foreign investors are free to "place their investments throughout the Republic of Moldova, in any area of business activity, as long as it does not go against the interests of the national security, anti-monopoly legislation, environment protection norms, public health and public order." However, there are significant informal barriers and indications that the formal reasons to block investment are liberally applied. According to the International Monetary Fund, "despite efforts to simplify licensing and business registration, there has been no significant improvement in the business climate. Moreover, the privatization program has stalled, while corruption remains widespread and governance weak. Government interference in the private sector…casts doubt over the authorities' commitment to market-oriented reforms." The Economist Intelligence Unit reports that the "poor investment climate, including annulments of some earlier sales, continues to deter many Western investors. Between 2001 and 2004 the government privatized less than 60 of the 480-odd enterprises scheduled for sale." Foreign investors may not purchase agricultural or forest land. The IMF reports that both residents and non-residents may hold foreign exchange accounts, but approval is required in some cases. Payments and transfers require supporting documentation and approval of the National Bank of Moldova if they exceed specified amounts. Nearly all capital transactions require approval by or registration with the National Bank of Moldova.

Banking and finance

There are no official barriers to founding foreign banks or branches in Moldova. The central bank has increased the minimum capital requirement, which is expected to contribute to consolidation in the banking sector. First Initiative reports that the banking sector "consists of 16 commercial banks (2003). There are 14 locally-owned banks, while the two remaining ones are from Russia and Romania. The banking sector is highly concentrated with the five largest banks accounting for over 70% of lending in 2002. Unlike the banking sector, the insurance sector has high levels of foreign-participation. The largest insurance firm in Moldova, the former state insurance company, is owned by an Australian company." Moldova's stock exchange is very small, listing fewer than 25 companies in 2002. The Moldovan embassy reports that the government holds shares in two banks—JSCB "Banca de Economii" SA and JSCB "EuroCreditBank"—including a controlling share of Banca de Economii. The Economist Intelligence Unit reports that foreign investment accounts for approximately 50 percent of total banking capital.

Wages and prices

The government influences prices through the large state-owned sector. According to the Ministry of Economy, the state regulates the prices of goods and services provided by monopolies and the prices of electric or thermal energy, land, medical services, and services offered by local tax regions. Moldova has two legal monthly minimum wages: one wage for state employees and another, higher wage for the private sector.

In 2015, the average monthly salary in the economy was MDL 4611 (approx. 210 EUR / 235 USD), up by 10.5% (0.7% inflation adjusted) against 2014.

In December 2015 the average salary for state employees was MDL 4162 and the average salary in private sector was MDL 5684, up by 4.0% and 8.6% against 2014 respectively.[10]

Property rights

The U.S. Department of Commerce reports that the "legal system has improved in recent years. Moldova has a documented and consistently applied commercial law." Nevertheless, much more needs to be done. According to the U.S. Department of State, "The Constitution provides for an independent judiciary; however, the executive branch has exerted undue influence on the judiciary. Many observers believe that arrears in salary payments also make it difficult for judges to remain independent from outside influences and free from corruption."

Regulation

"Bureaucratic procedures are not always transparent and red tape often makes processing unnecessarily long," reports the U.S. Department of Commerce. "[C]ommercial law is a confusing patchwork of narrow statutes and an outdated civil code. With USAID experts, a draft civil code has been developed which follows the current European practice of incorporating commercial law provisions." The same source reports that anti-corruption laws "are not effectively enforced and corruption exists at an advanced level." A report provided by the World Bank indicates that labor laws are somewhat rigid.

Informal market

Transparency International's 2004 score for Moldova is 2.3. Thereafter, Moldova's informal market score is 4 in 2005. In 2011 the corruption score for Moldova is 2.9, better than it was in 2004, concluding TI.[24]

Tourism

There are around 15000 sights and 300 natural zones within Moldova, which represent a potential for domestic and international tourists.

Statistics

Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
GDP Nominal (In US Dollars, Current Prices)[1]
GDP Nominal 5.158bn 7.096bn 6.373bn 6.813bn 8.225bn 8.536bn 9.359bn 9.357bn 7.614bn 7.965bn 9.556bn
Per Capita 1,443.8 1,989.1 1,788.3 1,913.6 2,310.6 2,398.1 2,630.5 2,631.8 2,142.9 2,243.1 2,694.4
GDP Purchasing Power Parity (In US Dollars, Current Prices)[2]
GDP PPP 14.181bn 15.584bn 14.761bn 15.993bn 17.437bn 17.647bn 19.645bn 20.978bn 21.117bn 22.266bn 23.716bn
Per Capita 3,969.2 4,368.3 4,142.0 4,491.8 4,898.7 4,957.8 5,521.9 5,900.6 5,943.3 6,270.4 6,686.8
Real GDP Growth (Percent Change, Relative to Previous Year)[4]
GDP Growth 3.0% 7.8% -6.0% 7.1% 6.8% -0.7% 9.4% 4.8% -0.4% 4.3% 4.5%
Inflation, Average Consumer Prices (Percent Change, Relative to Previous Year)[6]
CPI 12.3% 12.7% 0.006% 7.35% 7.65% 4.55% 4.57% 5.06% 9.6% 6.3% 6.6%
End of Period 13.1% 7.3% 0.4% 8.0% 7.8% 3.9% 5.1% 4.7% 13.5% 2.3% 7.3%
Public Debt (Percent of GDP)[26]
Government Gross Debt 23.8% 18.7% 27.6% 26.0% 24.7% 26.3% 25.2% 30.7% 38.2% 35.7% 31.5%
Current Account Balance -13.0% -13.7% -7.0% -6.4% -9.9% -6.4% -4.1% -4.5% -4.8% -3.3% -6.2%
External Debt (In US Dollars)[27]
General Government 0.765bn 0.778bn 0.957bn 1.116bn 1.157bn 1.265bn 1.305bn 1.320bn 1.354bn 1.481bn 1.722bn
Total External Debt 3.317bn 4.079bn 4.358bn 4.711bn 5.358bn 6.019bn 6.874bn 6.495bn 6.104bn 6.235bn 6.973bn

Moldovan economy in graphics

Industrial production growth rate: 3.4% (2017)[28]
Agricultural production growth rate: 8.6% (2017)[29]

See also

References

 This article incorporates public domain material from the CIA World Factbook website https://www.cia.gov/library/publications/the-world-factbook/index.html.

  1. ^ a b c "Moldova; Gross Domestic Product (Nominal) // World Economic Outlook Database, October 2018". International Monetary Fund. Retrieved 9 October 2018.
  2. ^ a b c "Moldova; Gross Domestic Product (Purchasing Power Parity) // World Economic Outlook Database, October 2018". International Monetary Fund. Retrieved 9 October 2018.
  3. ^ "World Bank forecast for Moldova, June 2018   (p. 151)" (PDF). World Bank. Retrieved 11 September 2018.
  4. ^ a b "Moldova; Gross Domestic Product (Percent Change) // World Economic Outlook Database, October 2018". International Monetary Fund. Retrieved 9 October 2018.
  5. ^ "The World Factbook: Moldova". CIA. Retrieved 18 March 2018.
  6. ^ a b "Moldova; Inflation, Average Consumer Prices (Percent Change) // World Economic Outlook Database, October 2018". International Monetary Fund. Retrieved 9 October 2018.
  7. ^ "Poverty headcount ratio at national poverty lines (% of population)". THE WORLD BANK. Retrieved 18 March 2018.
  8. ^ "World Development Indicators: Distribution of income or consumption". THE WORLD BANK. Retrieved 18 March 2018.
  9. ^ a b c (in Romanian) "Forța de muncă în Republica Moldova: ocuparea şi șomajul în anul 2017 // Biroul Naţional de Statistică". Retrieved 3 April 2018.
  10. ^ a b (in Romanian) "Câștigul salarial mediu lunar în trimestrul IV 2017 // Biroul Naţional de Statistică". Retrieved 18 March 2018.
  11. ^ Doing Business 2018 report
  12. ^ a b c d (in Romanian) External trade activity of the Republic of Moldova in 2017 statistica.md
  13. ^ https://en.portal.santandertrade.com/establish-overseas/moldova/investing
  14. ^ a b "The World Factbook". Retrieved 3 March 2015.
  15. ^ "Moldova's credit challenges include its economy vulnerability and weak institutions". Moody's Investors Service. 22 January 2018. Retrieved 8 February 2018.
  16. ^ (in Romanian) Informatia privind evoluția activelor oficiale de rezervă în luna ianuarie 2018 Banca Naţională a Moldovei
  17. ^ "GDP per capita, PPP (current international $)". World Bank. Retrieved 10 September 2015.
  18. ^ Marandici, Ion. 2008. Remittances and development in Moldova. Institute for Development and Social Initiatives (IDIS-Viitorul), Chisinau. Available online at "Archived copy" (PDF). Archived from the original (PDF) on 2012-04-01. Retrieved 2011-05-06.
  19. ^ http://www.heritage.org/index/country/moldova
  20. ^ http://www.doingbusiness.org/data/exploreeconomies/moldova/
  21. ^ http://fta.mofcom.gov.cn/enarticle/chinamoldovaen/chinamoldovaennews/201802/37123_1.html
  22. ^ a b http://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD?locations=RO-MD-UA&name_desc=true
  23. ^ a b c d http://www.statistica.md/newsview.php?l=ro&idc=168&id=5079
  24. ^ Transparency International e.V. "2011 Corruption Perceptions Index -- Results". Retrieved 3 March 2015.
  25. ^ (in Romanian) "Activitatea turistică a agenţiilor de turism şi turoperatorilor din Republica Moldova în anul 2016 // Biroul Naţional de Statistică". Retrieved 21 February 2017.
  26. ^ "Moldova; General Government Gross Debt (Percent of GDP) // World Economic Outlook Database, October 2018". International Monetary Fund. Retrieved 9 October 2018.
  27. ^ "External debt at the end of 2017 (preliminary data)". Banca Naţională a Moldovei. Retrieved 18 April 2018.
  28. ^ (in Romanian)"Activitatea industriei Republicii Moldova în ianuarie-decembrie 2017". Biroul Naţional de Statistică. Retrieved 5 March 2018.
  29. ^ (in Romanian)"Producţia globală agricolă în anul 2017". Biroul Naţional de Statistică. Retrieved 5 March 2018.

External links

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