November 7 (SeeNews) - The European Bank for Reconstruction and Development (EBRD) said on Tuesday it maintained its May projection for Moldova's economic growth in 2017 at 3.0%.
For 2018, the bank forecasts economic growth of 3.5% in Moldova, the same rate of increase as in its previous forecast made in May, the EBRD noted in its latest Regional Economic Prospects report.
Moldova’s GDP grew by 4.1% in 2016, supported by growth in agriculture output and in household consumption. In the first half of 2017, Moldova's GDP expanded by a real 2.8% year-on-year, reaching 63.9 billion lei. The wholesale and construction sectors led the rise, and final household consumption grew 3.5% on the year.
However, Moldova’s narrow economic base is concentrated in agriculture, which can lead to volatile growth rates, the EBRD warned.
In April, the International Monetary Fund lent Moldova $21.5 million (19.6 million euro) under the country's current three-year $178 million credit facility extended in November 2016.
"Macroeconomic stabilisation and an improved external environment underpin near-term growth outlook. However, vulnerabilities in the financial sector remain despite recently taken steps to improve banking supervision and the regulatory framework," the EBRD said.
Moldova has been trying to cope with a major banking crisis since about $1 billion went missing from three of the country's banks in November 2014.
Amid monetary tightening and a stable leu, inflation decelerated to 6.3% year-on-year in the first nine months of 2017, the EBRD noted.
Moldova's central bank, BNM, last revised its key monetary rate in August, lowering it to 7.5% from 8.0%, striving to keep inflation rate close to its 5.0% target. BNM now projects 6.5% inflation in 2017 and 4.4% in 2018.
($=0.8505 euro)