EBRD affirms Moldova's 2024 GDP growth f'cast at 3.5%

In 2025, Moldova's gross domestic product (GDP) growth is expected to accelerate to 3.7%, the EBRD said in its May 2024 Regional Economic Prospects report.

The lender said that reforms made by the country towards its objective of EU accession could increase growth, while the main downside risk remains geopolitical instability, as Moldova continues to struggle with the consequences of Russia's war on Ukraine.

The EBRD also revised upwards its estimate of Moldova's GDP growth in 2023 to 0.7%, adding 0.7 percentage points (pp) to its September forecast.

"Output in the agricultural sector rebounded by 32 per cent in 2023 after a similar decline a year earlier, whilst manufacturing, construction, transport and trade continued to struggle," the EBRD noted.

Moldova's inflation, which peaked at 34.6% in October 2022, gradually abated to enter the target range of 3.5% - 6.5% by the end of 2023 and stood at 4.3% in February of this year.

"Successful disinflation allowed the National Bank of Moldova to reduce the policy rate from 21.5 per cent in August 2022 to 3.75 per cent in March 2024," the bank noted.

Last week, Moldova's central bank said it decided to cut its key rate to 3.6% from 3.75% to stimulate the economy amid slowing inflation.

In the EBRD's region of Eastern Europe and the Caucasus where Moldova belongs, the bank forecasts that economic growth will slow down to 3.5% in 2024, from 4.4% recorded last year, as risks related to the war in Ukraine remain high. In 2025, the region's economic growth is projected to speed up to 4.9%, mainly driven by the expected recovery in the growth rates of Moldova and Ukraine.

(1 euro=19.1036 Moldovan lei)