Moldova: Economic and Political Overview
Moldova's economic performance has been relatively strong over the past few years but has been repeatedly hindered by the unfavorable global situation or by poor climatic conditions. After the economy collapsed due to the COVID-19 outbreak, GDP returned to its pre-pandemic level in 2021. The economy continues to be burdened by spillovers from the war. After contracting by 5% in 2022, GDP experienced a further decline of 2.3% in the first half of 2023. Thanks to a recovery in the second part of the year, GDP grew an estimated 0.7%, according to official governmental figures. The IMF anticipates GDP growth of 4.3% this year and 5% in 2025, driven by robust agricultural production and a resurgence in consumption and investment. This growth is expected to be fueled by the recovery of real wages and remittances, along with an improvement in risk perceptions.
Concerning public finances, in 2023, the fiscal deficit was projected to have reached 5% of GDP, indicating revenue underperformance and budget under-execution (IMF). In spending, the 2023 budget prioritized responding to the cost-of-living crisis, ensuring energy security, and addressing low civil service capacity. Two supplementary budgets were adopted, in May and October, to allocate additional grants and reallocate resources from under-executing programs. Meanwhile, the debt-to-GDP ratio increased to 35.1% in 2023 (from 32.6% one year earlier) and is expected to follow an upward trend in 2024, reaching 38.4% in 2024, before it edges down to 37.4% in 2025, according to the IMF. Headline inflation decreased to 6.3% in October, down from its peak of 34.6% in October 2022. This decline was driven by lower food and fuel prices, attributed to the recovery in agricultural production following the 2022 drought, as well as a determined monetary policy response. Additionally, core inflation also saw a decline in recent months. Over the longer term, Moldova's economy still faces many challenges, including corruption, political uncertainty, weak administrative capacity, energy import dependence, Russian political and economic pressure, heavy dependence on agricultural exports, and unresolved separatism in Moldova's Transnistria region. Nevertheless, Moldova became an EU candidate country in 2022, and in November 2023, the EU Commission recommended that the European Council opens accession negotiations.
Despite experiencing robust growth over the past two decades, which has led to improvements in living standards and a reduction in poverty, Moldova still ranks among the poorest countries in Europe. Unemployment declined to 3.8% in 2023Q2, after reaching 5.5% in 2023Q1. However, it remains well above end-2021 levels (IMF). In 2022, the GDP per capita was estimated at USD 15,719 by the World Bank, 71.2% lower than the European Union’s average.
| Main Indicators | 2022 | 2023 (E) | 2024 (E) | 2025 (E) | 2026 (E) |
| GDP (billions USD) | 14.55 | 16.00 | 17.16 | 17.94 | 19.06 |
| GDP (Constant Prices, Annual % Change) | -5.0 | 2.0 | 4.3 | 5.0 | 5.0 |
| GDP per Capita (USD) | 5,726 | 6,411 | 7,002 | 7,449 | 8,059 |
| General Government Gross Debt (in % of GDP) | 32.6 | 35.1 | 38.4 | 37.4 | 36.9 |
| Inflation Rate (%) | n/a | 13.3 | 5.0 | 5.0 | 5.0 |
| Unemployment Rate (% of the Labour Force) | 4.6 | 4.9 | 4.2 | 4.2 | 4.2 |
| Current Account (billions USD) | -2.09 | -1.94 | -1.86 | -1.78 | -1.79 |
| Current Account (in % of GDP) | -14.4 | -12.1 | -10.9 | -9.9 | -9.4 |
Source: IMF – World Economic Outlook Database, October 2021
Even if its impact on the country´s GDP has decreased over the past years, the agriculture sector is key to Moldova's economy: it still represents 8.3% of the GDP and employs nearly 55% of the workforce (World Bank, latest data available). Farmlands cover 2.48 million hectares or 75% of the country’s territory, including 1.82 million hectares of arable land (National Bureau of Statistics). Moldova's main products are vegetables, fruits, grapes, grain, sugar beets, sunflower seeds, tobacco, beef, milk, and wine. In recent years, the government of Moldova has made efforts to modernize and improve the efficiency of the agricultural sector. This has included investments in new equipment and technology, as well as the implementation of policies aimed at improving land use and increasing agricultural productivity. However, the agricultural sector still faces some challenges, including limited access to financing and a lack of infrastructure in rural areas. According to data from the statistical office, Moldova’s agricultural output fell by 23.6% in 2023, as crop production experienced an annual growth of 35.1%, whereas the output of animal products slightly decreased by 1.9%.
The secondary sector represents 19.4% of the GDP, employing 13% of the active population. Traditionally, the country’s main industries have been manufacturing, agriculture and food processing, textile, apparel, and footwear. The manufacturing industry alone is estimated to contribute 9% of the country’s GDP. The government of Moldova has implemented policies aimed at supporting the growth of the industrial sector, including tax incentives for investors and efforts to improve the business environment. The National Bureau of Statistics states that Moldova's industrial production contracted by 3.6% y/y in 2023, after a 5% decline in 2022. The activity in the core manufacturing sector contracted by 5.3%.
The GDP structure is progressively turning towards services, to the detriment of heavy industry and agriculture. The tertiary sector now represents 58.4% of the GDP, employing nearly one-third of the workforce (32%). It is driven by the insurance, legal consultancy, and telecommunications sectors. The ICT sector is also growing. The finance sector in Moldova has undergone significant reforms in recent years, with efforts to strengthen regulation and supervision, increase transparency and accountability, and promote competition. Moldova has also made efforts to improve its transportation infrastructure, including through investments in roads, railways, and airports, in order to support the growth of the services sector. According to data from the National Bureau of Statistics, Moldova's retail sales index (excluding car sales) surged by 9.3% year-on-year in Q3 2023, rebounding from a loss of momentum to 2.3% year-on-year in Q2. Concerning the tourism sector, the country welcomed almost 391k tourists in 2023, for a total of 1.41 million overnight stays.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
| Employment By Sector (in % of Total Employment) | 37.6 | 16.5 | 45.9 |
| Value Added (in % of GDP) | 7.9 | 20.0 | 58.0 |
| Value Added (Annual % Change) | -25.8 | -10.2 | -0.3 |
Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.
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The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
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Latest Update: April 2024
