Economic Outline

Economic Indicators

Moldova’s economy is showing signs of recovery, despite ongoing unprecedented challenges from the spillover effects of Russia's invasion of Ukraine. The country faces structural challenges such as low productivity growth, governance issues, a large state presence, limited competition, an imbalanced business environment, and tax distortions. After growing by 0.7% in 2023, Moldova's GDP increased by 0.1% year-on-year to MDL 324 billion (EUR 16.7 billion) in 2024, following negative growth rates in the second half of the year due to the weak performance of the agriculture sector, according to the statistics bureau. The Economy Ministry estimates that Moldova's GDP will grow by 1% in 2025, according to the baseline forecast, as the plan is implemented and EU investments are absorbed.

Regarding public finances, Moldova's general government deficit narrowed to 3.9% of GDP in 2024, driven by strong revenue growth and lower-than-budgeted spending, particularly in capital expenditure (Fitch Ratings). The Moldovan Parliament adopted amendments to the 2025 state budget law, raising revenues by MDL 3.73 billion (5.2%) to MDL 75.285 billion and expenditures by MDL 7.743 billion (9.1%) to MDL 93.191 billion. As a result, the budget deficit will rise by 28.9% to MDL 17.906 billion, or 5.1% of GDP. General government debt was estimated at 38.5% of GDP at the end-2024 and is projected to approach 43% by 2026. Around 63% of the debt is denominated in foreign currency, primarily owed to official creditors on concessional terms. Moldova has no external commercial debt, and interest costs remain low at 1.4% of GDP or 4.1% of government revenues (Fitch Ratings). Meanwhile, average inflation stood at 4.7% in 2024 (from 13.4% one year earlier), but accelerated to 9% y/y in January 2025, driven by adjustments to gas, electricity, and heating tariffs, along with higher prices for certain food products. Although EU funding to subsidise energy bills and weak domestic demand may help moderate the impact of rising electricity prices, Fitch projects annual inflation to average 9.5% in 2025. Moldova became an EU candidate country in 2022, and in November 2023, the EU Commission recommended that the European Council open accession negotiations. On 20 October 2024, Moldova held a constitutional referendum alongside the first round of the presidential election, approving an amendment to include the country’s EU membership aspiration in the Constitution.

Despite two decades of sustained economic growth, poverty persists, especially in rural areas with limited access to services and economic opportunities. Traditional poverty alleviation methods, like remittances and social assistance, are slowing, and low labour force participation and employment rates hinder employment-based poverty reduction, highlighting the need for structural reforms. While the unemployment rate was estimated at 4% in 2024 by the National Bureau of Statistics, nearly a quarter of young people aged 15-34 were neither employed nor in education and training (NEET). In 2024, the GDP per capita was estimated at USD 18,524 by the IMF, around 70% lower than the European Union’s average.

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