The political confrontations over the Association Agreement and the Deep and Comprehensive Free Trade Agreement (DCFTA) with the EU discourage the potential investors from coming to the Republic of Moldova. The politicians can say what they want, but should be attentive to the impact of their statements on the business climate. Such suggestions were formulated by the German Economic Team (GET Moldova).
In a news conference at IPN, GET Moldova leader Ricardo Giucci, Berlin Economics director, said the intensification of trade with the EU is not new, but a long-term trend, which started more than 10 years ago, long before the DCFTA was signed. Since 2004, Moldovan exports to the EU increased by more than 10% per year in average (in USD). As a result of this trend, the EU is now by far the No. 1 trading partner of Moldova: 65% of total exports are destined for the EU and 49% of imports are supplied from the EU.
In real terms, exports to the EU in 2015 increased by 27% on 2014. Because of the price shock, export revenues went down in 2015, including those from the EU (by 2.3%).
The Moldovan authorities should continue to implement the DCFTA, as this is in the economic interest of the country and its population, stated Ricardo Giucci.
According to the expert, it is important to understand that any questioning of the DCFTA by official representatives weakens the effect of the DCFTA and has a negative economic impact on the country. Potential investors interested in producing in Moldova and exporting to the EU might postpone or even cancel investment decisions in view of new perceived risks.
Economic Woldemar Walter, one of the authors of the analysis, said there is no need to decide whether to freely trade with Russia or with the EU, as the DCFTA is fully compatible with the existing free trade with Russia. Moldova should aim to secure free trade with both sides.