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Economy

The IMF estimates an economic growth of 3.5% for the Republic of Moldova in 2019

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However, the report on global economic outlook “World Economic Outlook” shows that the Moldovan economy will grow more slowly than the previous forecast when the fund expected an increase of 3.8%, informs Moldpres.

According to the latest report of the Fund, the annual inflation rate will be 3.3% and the current account deficit of the Republic of Moldova will represent 7.7% of the GDP in 2019.

The IMF expects the economy of the Republic of Moldova to grow by 3.8% in 2020, and the same economic growth is projected by 2024.

The World Bank, too, recently revised the GDP growth forecast for Moldova in 2019 by 0.2 percentage points – from 3.8% to 3.6%. The World Bank forecasts inflation for this year at 4.7%.

How many years does RM need to reach the level of economic development of EU countries in 2018?

This economic growth rate of 3.5% is the lowest for the group of the poorest member states of the Commonwealth of Independent States (CIS), of which, according to IMF classification, the Republic of Moldova is part of. Accordingly, to reach the EU level in 2018, Moldova needs 34 years.

“The situation described above is not a short-term evolution of the national economy, but a long-lasting trait of economic changes in the Republic of Moldova,” said economist Viorel Gârbu.

According to the expert, taking into consideration the annual economic growth in the last 20 years (4%), the Republic of Moldova needs 14 years to reach the average level of development of economies in transition.

Approximately 27 years will be needed to reach the level of the CIS member state’s economic development in 2018 or 34 years – to reach the 2018 level of economic development in transition economies in Europe.

Economy

Global Talent Competitiveness Index: Moldova when it comes to Artificial Intelligence

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The 7th edition of the Global Talent Competitiveness Index (GTCI) addressed the topic Global Talent in the Age of Artificial Intelligence. The index is used to rank 132 national economies, across all groups of income and levels of development, that representing 97% of the world’s GDP and 94% of its population. The report referred, first of all, to the level of innovation and technology development, exploring how the development of Artificial Intelligence (AI) is not only changing the nature of work but also forcing a re-evaluation of workplace practices, corporate structures and innovation ecosystems.

This year, Moldova ranked 86th out of 132 analysed economies, being ranked behind the neighbouring countries such as Ukraine and Romania, which ranked 66th and 64th, respectively.

The countries that are best positioned to benefit from the AI revolution are also the most developed countries in the world, especially when it comes to the competitiveness and potential of attracting and training best professionals. Top ten countries in the ranking are Switzerland, the United States of America, Singapore, Sweden, Denmark, the Netherlands, Finland, Luxembourg, Norway and Australia.

New York, London, Singapore, San Francisco, Boston, Hong Kong, Paris, Tokyo, Los Angeles and Munich are among the most developed cities in this regard.

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source: insead.edu

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source: insead.edu

GTCI highlights

One of the most important observations made in the GTCI report for 2020 is that the gap between talent champions (almost all of them high-income countries) and the rest of the world is widening. Still, AI may provide significant opportunities for emerging countries to leapfrog.

The top of the GTCI rankings is still dominated by Europe, including the Nordic countries – a significant number of small high-income economies, many of them being either landlocked, island or quasi-island economies, including Switzerland (1st), Singapore (3rd), Luxembourg (8th), Iceland (14th) or Austria (17th).

According to the report, the key factor is developing relatively open socio-economic policies in which talent growth and management are central priorities in the age of AI.

Moldova

Moldova managed to get a score of 36.64, being ranked 86th out of 132 countries. It was classified as lower-middle income country and ranked 7th out of 32 countries included in this category. The country’s talent competitiveness index weakened as compared to the period between 2015-2017, when it was listed around the 61st position.

Moldova was evaluated with the highest scores for such aspects as gender development gap, ease of doing business, number of female graduates, competition intensity and political stability, while the lowest scores were given for its share of R&D expenditure, robot density, university ranking, number of registered researchers, scientific journal articles, labour productivity per employee, new business density and collaboration across organisations.

This year’s model of the GTCI index includes a total of 70 variables, up from 68 indicators used in the GTCI 2019.

source: insead.edu

Photo: cambridgealert.com

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Economy

The IMF conclusions// will the last part of the program funds be disbursed to Moldova?

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An International Monetary Fund (IMF) team, led by Ruben Atoyan, the head of the IMF Mission, visited Moldova between January 22 to February 5 to conduct the 2020 Article IV consultation and the sixth and final review of Moldova’s economic program supported by the IMF’s Extended Credit Facility (ECF) and Extended Fund Facility (EFF) arrangements.

Ruben Atoyan appreciated the discussions with the Moldovan authorities as consistent and insistent and confirmed that the Government team has demonstrated openness and determination in implementing the necessary reforms. Most of the objectives of the Moldova – IMF program were achieved and the program was a successful one, as a statement of the Government of the Republic of Moldova communicated.

At the meeting of Prime Minister Ion Chicu with the IMF team staff, the objectives to be achieved in the next period were discussed, including the approval of the legislation regarding non-banking financial institutions for the sustainable and safe development of this sector.

The parties also exchanged views on the consolidation of the national banking system and the pension system, concluded the need to focus on the objective of ensuring a sustainable, balanced and more inclusive economic growth, as well as discussed the reforms in education, healthcare and social policies to increase the standard of living in the Republic of Moldova, to combat migration and to change demographic trends.

On February 5, the IMF Communication Department issued a concluding statement that describes the preliminary findings of IMF staff at the end of the official visit to Moldova.

The most important conclusions were:

  • The last review under the IMF program is scheduled for March 16, 2020. The completion of the review will make available another  SDR 14.4 million (about $20 million) for Moldova;
  • The program has been successful in achieving its objectives. Comprehensive reforms have rehabilitated the banking system and strengthened financial sector governance, entrenching macro-financial stability;
  • Despite successful economical stabilisation efforts, widespread and significant governance and institutional vulnerabilities are major impediments to boosting living standards of Moldovan people, especially high perception of corruption, weak rule of law and political instability present risks;
  • Prudent and well-coordinated policies are needed to safeguard the progress achieved. Decisive governance and institutional reforms are necessary for faster, sustainable, and inclusive growth.

“The program was success and achieved its goals. The comprehensive reforms have rehabilitated the banking system and strengthened the finance sector, this progress is commendable under the conditions of a volatile political situation,” said Ruben Atoyan, the head of the IMF Mission at a press conference.

source: gov.md

Next, Prime Minister of Moldova is going to send a letter to the IMF asking for another mission’s visit to Chisinau for conducting an evaluation and prepare a new international program.

“With the current program successfully completed, half the chances of having a new program are assured,” Ion Chicu claimed optimistically.

The prime minister said that the Government wants a new program with the IMF, not only for the international funds that can be granted, but also for the support and assistance that can be received in promoting reforms.

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Moldova’s three-year IMF program was approved on November 7, 2016, being supported by a loan of 129.4 million special drawing rights (SDR), which is about $182 million, or 75% of the Republic of Moldova’s quota. 115 million SDR (about US$160 million) have been already disbursed. Two thirds of the loan are provided under the Extended Credit Facility, which carries a zero interest rate through 2018, a grace period of 5½ years, and a 10-year maturity. The rest of the loan is provided under the Extended Fund Facility, which carries an annual interest rate equal to the SDR basic rate of charge (currently 1.7 percent), and is repayable over 10 years with a 4½ -year grace period.

Photo: gov.md

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Economy

Figures// 2019 was a record year for the Moldovan wine exports

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The exports of the Moldovan wine in 2019 have reached the highest level from the last 5 years. According to the figures presented by the National Office of Vine and Wine from Moldova, both the volume of Moldovan wine exports and their value were at the highest level since 2014.

In the year 2019, the Republic of Moldova exported 156 674 million litres of wine, that being 9% more as compared to 2018. The majority of the exported wine products were represented by still wine (94%), while cognac represented just 3% of the total, fortified wines – 2%, and sparkling wines – 1%. The total value of the exported wine amounted 3 086 million lei, that being 9.2% more than in 2018. Still wines generated 74% of total revenues, cognac – 20%, sparkling wines and fortified wines – 3% each.

While trying to expand to new markets such as Afghanistan, Syria, Togo and Guam, some less usual markets such as Australia, Norway and Libya, Moldovan exports were also targeted to some traditional markets such as Romania, Ukraine and Belarus. Throughout 2019, Romania continued to be a strategic market for the Moldovan wine, both by volume of exports and by revenue generated.

At the same time, both bottled wine and bulk wine exports have increased in the last year. For example, the exported quantity of bulk wine from Moldova reached 108,002 million litres in 2019. The main destination for bulk wine exports remained Belarus  – 43% of the total exported quantity.

The increase in volumes of bulk wine for export is due to the fact that the grape harvest was above the annual average in 2019.

The figures show that Romania, Poland, Russia, China, Czech Republic, Ukraine, Belarus, Kazakhstan, Canada and the USA are the top 10 countries where the Moldovan wine and wine products are exported.

Moldova started to be more and more remembered as a wine tourism destination all over the world. Such global wine portals as winerist.com included the country in the top of best wine tourism destinations for 2020.

The portal described Moldova as following:

“This small but perfectly formed nation nestled between Romania and the Ukraine is a beguiling blend of bucolic countryside, magnificent architecture, fascinating history and rural charm. What’s more, Moldova is also the home of some of Europe’s most ancient and fascinating wine culture, home to the biggest underground wine cellar in the world and over 150 wine producers of all shapes and sizes. Moldova’s unspoilt natural beauty, incredible local food and wine alongside world-beating hospitality which makes any visitor feel like a member of the family in a matter of minutes. Providing the warmest of welcomes is so important to Moldovan culture that ‘Be Our Guest’ has become the slogan of the country’s tourism board!”

Photo: Maksym Kaharlytskyi |Unsplash

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