March 31 (SeeNews) - Moldova's economy is expected to grow by 3.8% in 2021 and by 3.7% next year, the World Bank said.
The bank maintained its January growth forecast for 2021 assuming favourable conditions thanks to the rollout of Covid-19 vaccines, it said in the spring edition of its Europe and Central Asia Economic Update report published on Tuesday.
The bank sees Moldova's economy contracting by 7% in 2020, as compared to a 7.2% decline forecast in January.
Uncertainties related to the development of the coronavirus pandemic will keep Moldova's economy below its potential, according to the report.
Consumer and investment confidence are expected to improve on the back of favourable external conditions, increase in social transfers, and accommodative monetary stance and most sectors are expected to bounce back, though the 2019 levels are estimated to be reached only in 2022, the bank added. Also, the agricultural sector is expected to rebound strongly after a bad yield in 2020.
While the current account deficit is expected to have narrowed in 2020, it will gradually widen as the economy accelerates. Inflation is expected to remain lower than the target corridor of 5% +/- 1.5 pp in 2021-22 but to pick up as the recovery strengthens.
Moldova's capacity to mitigate the impact of the crisis and support economic recovery will critically depend on external financing, particularly a successful renegotiation on an IMF programme, the World Bank also said.
(1 euro =21.1287 Moldovan lei)