Economists’ forecast for 2021: Recession, decline in GDP and smaller incomes

The drought and the COVID-19 pandemic will lead to lower investments, significant economic recession and decline in the Gross Domestic Product and salaries in 2021. Some of the companies, especially those operating in the hospitality industry, can become insolvent, said economic expert Adrian Lupușor.

“The economy of the Republic of Moldova does not go through the best period. We anticipate that the pandemic, in parallel with the drought, will generate an economic recession that will be much more serious than in 2009. We speak about a substantial economic impact. The Gross Domestic Product, according to the main scenario, which is rather conservative, could decline by 7.5,” IPN quoted the representative of the think tank “Expert-Grup” as saying in the talk show “Natalia Morari’s Politics” on TV8 channel.

According to the expert, the future recession will hit the persons with low incomes, the lower-middle class that consists of persons who live on social benefits. Their situation will remain as bad. The COVID-19 pandemic and the drought affected the incomes of employees with low salaries, who work in the informal sector, agriculture, building and transport sectors.

“We anticipate that the salary incomes will decline by 8% in real terms, or even more. Besides, there will be affected the investment appetite, the investors’ wish to invest. There are medium-term risks here. We project that the activity will contract by 15%. Investments in fixed capital, equipment will decline next year. This will diminish the country’s competitiveness,” said Adrian Lupușor.

Ex-minister of finance Veaceslav Negruța said the forecasts for 2021 could be more negative. This way, the Republic of Moldova can witness an economic decline of 8% to 12%, which will be a record for the country.

“We entered the pandemic fully unprepared, without capacities to mobilize the necessary resources, not only the financial, but also the human resources. We wasted the human resources as we played with the people who were initially very motivated to cope with this pandemic,” he stated, noting this affected the management and minimization of costs for alleviating the effects of the pandemic.

In the future crisis that will affect a large number of people, Adrian Lupușor recommends the people to inform themselves from different sources, to filter out the information and to take informed decisions based on pessimistic scenarios.

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