November 1 (SeeNews) - The European Bank for Reconstruction and Development (EBRD) said on Thursday it has lifted its forecast for Moldova's economic growth in 2018 to 4% following robust performance of the country's economy in the first half of the year.
"The economy of Moldova is generating steady growth. Real GDP is estimated to have grown by 4.5% in 2017 and by the same rate year-on-year in the first half of 2018," the bank said in its new Regional Economic Prospects report.
In the last semiannual report issued in May, the EBRD predicted that Moldova's gross domestic product (GDP) will grow by 3.5% in 2018 and by 4% in 2019.
According to the bank, Moldova's economic growth has been supported by favourable external economic conditions and capital investment which returned to growth after negatively affecting economic expansion in 2015-2016. In the same period, rising remittances and real wages bolstered household consumption which, in turn, increased by 3.8% in real terms.
Moldova has built its 2018 budget bill on projections of 3.0% economic growth and a budget deficit equivalent to 2.8% of GDP.
Also, a widening of the current account deficit in the first half of 2018 reflected consumption-and investment-driven import growth. However, it was more than offset by foreign exchange capital inflows, the EBRD noted.
The bank praised the significant progress achieved in restoring shareholder transparency at the two systemically-important banks, following the entry of international investors into the ownership structure of these lenders.
Moldova has been trying to cope with a major banking crisis since November 2014 when about $1 billion (880 million euro) went missing from three local banks.
The EBRD also noted that the existing IMF programme is an important anchor of reforms and macroeconomic stability, and its implementation needs to continue without delays.
In July, the IMF decided to lend Moldova a further $33.8 million under the current three-year funding arrangement. So far, the latest allocation included, Moldova has received a total of $113.3 million in four tranches under the three-year credit facility of $178.7 million approved in November 2016.
($=0.879 euro)