Moldova's Economy between the Echo of War and Resilience: Forecasts for 2023-2024

The economy contracted by 5.9% in 2022, hit by Russia's aggression in Ukraine, the energy crisis, inflation and drought. Agriculture, construction, real estate and industry suffered most. Macrofinancial stability held, thanks to government measures and external support. The baseline scenario projects growth of 4.7% in 2023, 5.4% in 2024 and 4-5% a year in 2025-2027, assuming regional security stabilises, energy links with Romania improve and EU accession talks begin.

Inflation is expected to keep slowing in 2023-2024. Wages rose from 42.7% to 50.7% of household income in 2012-2022, while remittances fell to 13.8% of GDP. Banks proved resilient, and net capital inflows were 37% higher than in 2021. The 2023 deficit is planned at 6% of GDP, with fiscal space of about 1.5%, so external grants and concessional loans remain vital. The authors call for correcting the large current account deficit through structural reforms.