May 10 (SeeNews) - The World Bank said on Thursday it has affirmed its forecast for Moldova's 2018 economic growth at 3.8% driven by private consumption.
"Growth is expected to be robust and reach 3.8% in 2018 and 3.7% in 2019 but remain below the historical averages of 4.6%. In the medium
-term the recovery in remittances together with private wage growth will sustain private consumption, which will remain a key driver of growth," the World Bank said in a Macro Poverty Outlook for Europe and Central Asia.
The World Bank also said it expects import growth to outpace export growth, leading to a negative contribution of net trade to GDP growth.
Moldova has built its 2018 budget bill on projections of 3.0% economic growth and a budget deficit equivalent to 2.8% of GDP.
With parliamentary elections in November 2018, after a prolonged contraction, the government plans to increase public investments, with a focus on the road sector, it added.
"Still, structural weaknesses will contain growth at around 3.5%. As consumption and imports strengthen, the current account deficit is
expected to gradually increase, but to remain below its historical average thanks to revitalization of foreign inflows," the global lender said.
The inflation rate is expected to reach the lower bound of the target corridor in 2018 due to base effects and lower regulated prices and to gradually increasing to the target of 5% in medium term.
While the authorities have made efforts to reduce macroeconomic risks, faster growth is necessary to converge with EU countries, the report showed. "For this to happen, Moldova needs deep transformational reforms that will create new and better jobs in the private sector and consequently will create space for public investment needs," the bank stressed.
The poverty headcount, measured at the international moderate poverty threshold of $5.5/day is projected to decline from 16.3% in 2015 to 12.7% in 2018 and 11.7 %in 2019, the report showed.
Following are projections made for 2018 and 2019 by the World Bank for Moldova (annual percent change):
|
2018 |
2019 |
Real GDP growth |
3.8 |
3.7 |
Inflation (Consumer Price Index |
3.5 |
4.5 |
Current Account Balance (% of GDP) |
-4.8 |
-5.2 |
Net Foreign Direct Investment (% of GDP) |
2.7 |
3.3 |
Fiscal Balance (% of GDP) |
-3.0 |
-2.5 |
Debt (% of GDP) |
-39.2 |
-38.7 |
Upper middle-income poverty rate |
13.6 |
12.3 |
(1 euro=19.8098 Moldovan lei)