CHISINAU (Moldova), December 16 (SeeNews) – Moldova's economy contracted by a real 7.7% in the first nine months of 2009 on shrinking consumption and capital investments, after posting 7.6% growth a year earlier, local analysts said on Wednesday.
In the third quarter alone, the country's GDP shrank by 7.5% on the year after expanding 10.8% a year ago, data from the country’s statistics office showed on Tuesday.
"The main drivers of the decline are decreasing consumption, decreasing capital investments due to the economic, but also political crisis in Moldova that affected the most foreign investments," Moldovan independent think-tank Expert Grup said in its Moldovan Economic Growth Analysis.
"A decrease in foreign demand that resulted in a severe industrial recession in Moldova also contributed to the GDP decline," it said, adding that, as these trends continue, Moldova's economy could shrink by between 8.0% and 11% in 2009.
Expert Grup's opinion was echoed by Iurie Gotisan, an independent analyst: "Domestic consumption continued to fall in the January-September period due to lower incomes of the population as salaries in the country and remittances from Moldovans working abroad decreased drastically this year."
"Forced leaves, even lay-offs, also resulted in lower incomes of Moldovans in the first nine months," Gotisan told SeeNews.
Final consumption in Moldova fell by 7.2% on the year in January to September, as household consumption decreased by 9.2%. Gross capital formation was 53.2% down on the year in the first nine months.
The value added in the country’s construction and industrial sectors fell by 30.8% and 23.3%, respectively. The transport and communications sector was down by 14.8% in the first nine months.
"We believe that the most optimist scenario for 2009 is a 20% decline in industrial output and this will be one of the deepest declines of industrial production in Europe and Commonwealth of Independent States," Expert Grup said.
Moldova’s retail sales and its services sector were down by an annual 4.5% each in the first nine months this year. Exports and imports, calculated in U.S. dollars, fell by 11.8% and 24.6%, respectively, in January-September.
"Economic contraction in the third quarter was lower than in the first half of the year. The processing industry and constructions reported falls, while some stabilisation was noticed in retail trade and services sectors," Gotisan said. His forecast for the GDP contraction in the third quarter and in the first nine months had been 6.0% and up to 7.0%, respectively.
"Even though the current year began with a significant contraction of many services sub-sectors, in the second part of the year the situation improved,” Expert Grup noted.
Calculated in current prices, the country's gross domestic product (GDP) totalled 44.166 billion lei ($3.6 billion/2.5 billion euro) in the first nine months, the statistics office said.
In November, Moldova's government reversed its forecast of a real 6.0% economic growth this year to a 9.0% contraction. It also lowered its end-year inflation forecast for 2009 to 0.5% from 9.5% projected earlier.
The European Bank for Reconstruction and Development expects Moldova's economy to contract by 6.0% in 2009, under its latest forecast. The International Monetary Fund has forecast a 9.0% contraction in Moldova’s 2009 GDP in real terms.
"With a string of domestic and external crises the year 2009 has clearly shown how fragile and illusory have the economic growth and modernisation been in Moldova in the last decade. The expected GDP decline will bring Moldova three years back," Expert Grup said.
(1 euro=17.8631 Moldovan lei)