March 13 (SeeNews) - Moldova's economy ministry on Monday revised upwards to 4.5% from 3% its forecast for the country's economic growth in 2017.
The economy ministry's optimism for 2017 is based on hopes for an improvement in the economic and financial context worldwide, it said in a press release.
In an attempt to boost the economy, Moldova aims to further promote exports, to provide strong support for the development of private and state enterprises and to continue structural reforms, the ministry added.
Moldova's economy expanded by 6.3% year-on-year in real terms in the third quarter of 2016, mainly on the back of successful performance of the agriculture, forestry and fishing sector, the latest data from the country's statistical office BNS showed.
The country's budget for 2017 is built on 3% economic growth to 142.8 billion lei ($7.15 billion/6.74 billion euro) and a deficit of 4.15 billion lei, or 2.9% of GDP.
Going forward, the ministry projects GDP growth of 3.5 - 4.5% annually between 2017 and 2020.
During the next three years, the ministry said it sees inessential fluctuations of the leu exchange rate in the range of 20 lei for an euro and of 22.4 lei for one US dollar.
"Maintaining the exchange rate at the same level will contribute to price stability. We forecast inflation at the end of this year at 6.5%, at 5.5% for 2018 and at 5% for 2019 and 2020," the ministry said.
Moldova's consumer price inflation accelerated to 4.7% year-on-year in February, from 3% in January, BNS data showed. The country's central bank BNM said in February it projects 5.2% inflation in 2017 and 4.9% in 2018.
An important factor that will contribute to national economic growth will be the rise of investment in long-term tangible assets with an annual average rate of about 6.1% during 2017-2020, the forecast also showed. The growth will be the result of enhanced investment policies for performance programs, of the continous upgrading of infrastructure and state enterprises and also of the efforts to help small businesses to develop, the ministry said.
Long-term investments in tangible assets in Moldova fell 14% in comparable prices to 19.4 billion lei in 2016, statistics office data showed.
The ministry also expects exports to increase in the next three years by 7.5% annually, while imports are expected to rise by 5.4% annually.
According to ministry's estimates, GDP growth in the 2017-2020 period will be generated by annual increases of the industrial output in real terms by 5.5% and by a 3.6% annual increase of agricultural production.
BNS data showed that in 2016, Moldova's trade deficit narrowed 2.2% on the year to $1.97 billion (1.87 billion euro), while total agricultural output rose by 18.6% on the year, mainly due to a strong increase of vegetal production.
At the end of February, the International Monetary Fund (IMF) raised Moldova's economic growth forecast for this year to 4.5% from 3%, and said that is considering providing a $21.2 million loan under the existent three-year credit facility. In order to sustain growth and job creation, Moldova must continue efforts to rehabilitate the financial system, to strengthen the governance and financial condition of banks and to enhance regulatory and supervisory frameworks, the financial institution added.
Moldova has been trying to cope with a major banking crisis since November 2014, when about $1 billion went missing from three of the country's banks. The sum was equal to about 16% of the impoverished ex-Soviet state's 2015 gross domestic product.
(1 euro = 21.0629 Moldovan lei)