Moldova faces a two-digit recession in 2009
The clear fall of basic economic indicators in the national economy for the 1st quarter of 2009 had a negative impact on the evolution of GDP for the first half of the year. Thus, the GDP was worth about 27.87 billion dollars in January-June 2009 in current prices on market, and decreased by 7.8 percent in real terms, compared with January-June 2008 (www.statistica.md). The gross value added in the commodity sector has declined by 16.7 percent in connection with the serious fall (by 24.4 percent) of the gross value added in the industry. The gross value added in agriculture, hunting and forestry was by 2.1 percent higher than in the similar period of the last year. In terms of contribution to the GDP formation the gross value added in the commodity sector decreased by one percent, halting the dynamic of GDP (decreased by 3.5 percent). The gross value added in the service sector decreased by 3.4 percent, compared with the similar period of the last year. Taxes on products collected to the national public budget decreased by more than 15 percent, reducing the GDP volume index (by about 3 percent). As for the use of GDP, the internal demand (final consumption and gross capital formation) in the 1st semester of 2009 decreased by more than 19 percent, particularly in connection with the decline of the gross fixed capital formation by about 37 percent and overall final consumption by more than 8 percent. The export and import of goods and services decreased by 12.5 percent and about 28 percent.
According to a report by the World Bank for the Pittsburgh G-20 meeting, the Republic of Moldova which is very dependent on remittances could face a serious deficit in 2009, perhaps up to 10 percent of GDP, additionally to the sudden constriction of the foreign funding. It says that remittances from Moldovans working abroad, equivalent to more than 30 percent of the GDP in 2008, were enough to compensate a current account deficit, which would count for 25 percent of the GDP without these remittances. As two thirds of remittances were coming from Russia, Moldova was seriously hit by the global crisiAs and remittance inflows as share in the GDP are expected to fall down to half. By continuing to enhance the impact of the economic shock, most of remittances fund the household consumption and fuel imports, which are very important to the Government for fiscal revenues. Remittances from Moldovan individuals (residents and non-residents) via Moldovan banks decreased by nearly hal f (by 46.5 percent) in July, down to 98.58 million dollars, compared with 180.79 million dollars. Moldovan nationals and foreign citizens sent 613.35 million dollars via Moldovan banks in seven months, which is by 34.5 percent less than in the similar period of last year. The national public budget deficit went up to 2.5 billion lei after seven months, with the Government having to issue more state securities and cover the deficit. The World Bank notes that "while the global economy gives unsure signs of recovery, 43 developing countries with low revenues keep remedying the consequences of the global recession, and this stresses the necessity of increasing the support to the poorest countries which face the crisis and economic volatility." The report says that the poorest countries face a deficit of 11.6 billion dollars for essential expenses, a sudden decline of the trade, capital inflows, remittances and tourism; additional efforts are required despite the actions taken until now.
ADEPT
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