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Moldova’s economic growth remains driven by private consumption, World Bank

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15:14, 17 May 2018

Moldova’s economic growth remains driven by private consumption, World Bank

The World Bank announced its economic update for Moldova for this year and next year. Growth is expected to be robust and reach 3.8% in 2018 and 3.7% in 2019, driven mainly by private consumption. According to experts, Moldova needs deep transformational reforms that will create new and better jobs in the private sector. In this regard, reforming justice sector, improving business environment and enhancing the skills of the workforce remain paramount. Among other recommendation are to reduce the interest rates on loans and to establish partnerships between universities and private companies, IPN reports.

The forecasts are based on the results achieved in agriculture and on the appreciation of the national currency that led to a growth of about 13% in exports. The rate of remittances in 2017 rose by about 13%. “The economic growth is expected to be robust and reach 3.8% in 2018 and 3.7% in 2019, still below the historical averages of 4.6%. The remittance recovery period, together with the rise in private salaries, will support consumption that will remain a key factor of growth,” stated WB expert Marcel Chistruga.

A number of risks are anticipated in 2018, such as the permanent risk in agriculture and the risk in the banking sector. “We want transparency and want the final beneficiaries to be identified. Moreover, the reforms should be continued. We speak about reforms in justice that will diminish corruption. Another risk is related to the parliamentary elections of 2018. The politicians will adopt unjustified costs and this will worsen the situation in the financial sector. The parliamentary elections of 2018 could undermine fiscal discipline and affect investors’ trust and donors’ support in the medium term,” stated Marcel Chistruga.

According to the experts, larger economic growth is needed so as to converge with the EU states. “Sustained reforms and more and better paid jobs are needed, alongside the justice sector reform and support for the business sector,” noted the expert.

In this connection, the experts underlined the importance of education, noting the universities should cooperate with enterprises. “The powers should be well defined and should meet the occupational standards. The universities should have a financing system based on results and should be receptive on the skills market,” said Lucia Casap, World Bank Representative to Moldova.

15:14, 17 May 2018

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