April 8 (SeeNews) - The World Bank said it maintained its forecast that Moldova's economic growth will remain subdued this year at 0.5%, before it speeds up to 4.0% in 2017 as investor confidence recovers.
"Net exports are expected to be the main growth driver given the exchange rate adjustment and tighter domestic demand policies," the World Bank said in a report issued on Thursday.
The budget deficit is expected to increase to 3.2% of GDP in 2016. Accordingly, poverty is expected to decline only modestly in 2016, by less than one percentage point, according to the World Bank.
However, along with the economic recovery, fiscal deficits are likely to decline to 2.5% of GDP by 2018, the international lender noted.
Also, as inflationary pressures dissipate, consumer prices are projected to decrease to the central bank’s inflation target range of 5 plus/minus 1.5% starting in 2017.
According to the financial institution, a flexible exchange rate will help mitigate some of the shocks, but efficient public spending and institutions are the most important elements of macroeconomic stabilization.
"With higher projected public debt and lower external grants and financing, Moldova should concentrate on efficiency gains in public recurrent expenditure and improve governance," the World Bank concluded.