April 19 (SeeNews) - Moldova's economy is expected to grow by a real 2% in 2022, the International Monetary Fund (IMF) said on Tuesday, downgrading its October forecast for a 5.2% growth.
In 2023, the IMF expects Moldova's economic output to increase by 5%, the Fund said in the April 2022 edition of its World Economic Outlook report.
The war in Ukraine adds to the series of supply shocks that have struck the global economy over the course of the pandemic, contributing to more shortages beyond the energy and agricultural sectors, the IMF noted, adding that some countries in Eastern Europe and Central Asia have large direct trade and remittance links with Russia.
"Activity in those economies is expected to suffer. The displacement of more than 4 million Ukrainian people to neighboring countries, especially Poland but also Romania, Moldova, and Hungary, will also add to economic pressures in the region," the IMF said.
Earlier this month, the IMF announced that it has reached a staff-level agreement to boost funding for Moldova by $267 million (246 million euro) to help the country cope with the impact of the war in Ukraine and surging international energy and food prices.
On Monday, Moldova's government revised the 2022 budget by allocating an additional 6.9 billion lei ($373 million/346 million euro) to the expenditure side in order to cope with the effects of the war in neighbouring Ukraine and the strong rise in prices.
"We are going through extraordinary times that require extraordinary decisions. Under these conditions, the government has decided to increase public spending to maintain economic stability, jobs and prevent vulnerabilities. I think it is right that, in times of crisis, the government should increase public spending, help citizens pay their bills, support businesses and farmers affected by the consequences of the war," prime minister Natalia Gavrilita said during a news conference announcing the budget revision.
The economy ministry said last month that it expects Moldova's economy to grow by just 0.3% in 2022 after expanding by 13.9% last year, with the slowdown mostly due to the war in Ukraine and disruption of global supply chains. Before Russia launched its invasion of Ukraine on February 24, the economy ministry targeted economic growth of 4.5% in 2022.
(1 euro=19.9415 lei)