FEDERATION OF EURO-ASIAN STOCK EXCHANGES
ANNUAL REPORT APRIL 2009
MOLDOVAN STOCK EXCHANGE
ECONOMIC AND POLITICAL DEVELOPMENTS
Economic and Political Environment
The political scene is expected to be less
stable over the forecast period than in recent
years. In the first half of 2009, held
parliamentary and presidential elections. The
ruling PCRM is likely to remain the leading
force in Moldovan politics over the forecast
period.
The presidential administration and the PCRM
parliamentary majority are expected to maintain
heir pro-EU stance, and fulfillment of the EU-
Moldova Action Plan will remain a central policy
goal. The EU has extended the plan following
its expiry in February 2008. Negotiations on a
new agreement have begun. Moldova may
succeed in following Ukraine in gaining an
association agreement, which is in preparation
for Ukraine. The country’s course clearly aims
to desire for closer integration in the EU. The
chance of an abrupt shift away from reformist
and pro-European policies is reduced by the
fact that the government’s pro-European focus
is by now deeply entrenched, and the EU’s
engagement with Moldova is more extensive
than in the past.
The general policy framework will remain
sound under the current government. The
prime minister, Zinaida Greceanii, was
instrumental in her previous role as first deputy
prime minister in ensuring good relations with
multilateral institutions and in formulating the
National Development Strategy for 2008-11.
Her government includes a strong economic
policy team. At least some elements of this
team are likely to remain in place under a
succeeding PCRM-led administration following
the election in 2009, and the mix of fiscal and
monetary policies is expected to remain
generally sound in 2009-10, particularly as the
government will pass on higher gas import
costs to consumers and improve the targeting
of subsidies.
The leu had strengthened consistently in 2008,
from Lei11.3:US$1 at the start of the year to
below Lei9.7:US$1 in August, reflecting the
large volume of remittances coming into the
country, as well as a pick-up in aid and
investment inflows. However, from mid-
September the currency fell sharply, weakening
towards Lei10.5:US$. Inflows of international
assistance are likely to remain high by
historical standards; combined with growth in
remittances, this will help to support the
currency, despite the extremely large trade
deficit. However, a gradual loosening of
monetary policy by the National Bank of
Moldova (NBM, the central bank) as inflation
starts to abate will help to end the appreciation
of the leu,
Economic Performance
The real GDP is expected to grow of around
6% in 2008, with large remittances and
increased interest from foreign investors
helping to sustain consumption and
investment. Remitted earnings amount to
around one-third of GDP. The moderate
slowdown in growth expected in 2009, of 5.5%,
is based on our expectation that consumption
growth will weaken, reflecting a slower rise in
remittances in a context of more difficult
conditions in the main destinations for
migrants. The pace of development of the
business environment may slightly decrease
due to the financial crisis sweeping the world
economic space
Moldova will continue to record a deficit in
goods trade of around 50% of GDP. Even
following the resumption of wine sales to
Russia in November 2007, wine exports will
remain far below historical levels. On the
import side, strong demand for consumer
goods, financed by inflows of workers’
remittances, will be the most important factor
pushing up the trade deficit. These will allow
the current-account deficit to narrow from an
estimated 14.5% of GDP in 2008 to an average
of just over 10% of GDP in 2009-10.*
Export growth is likely to recover from a very
weak 2008, when exports were hindered by
lingering drought-related difficulties in agro-
processing as well as the effects of strong real
effective appreciation of the leu on
competitiveness. A continuing improvement in
investment and export performance in 2010,
based on an improving global economic
situation, will see growth in Moldova recover to
6%.
* The Economic Intelligence Unit Ltd. October 2008.
The main objective of monetary and currency
policy in 2008 was the retention rate of inflation
within the 10.0% at the end of the year. In the
period January-November 2008 inflation
amounts 7.5%.
Key Information Contacts
MSE President Dr. Corneliu Dodu [email protected]
Listing, Marketing and Quotation Department [email protected],
[email protected]; [email protected]
National Securities Commission of Moldova www.cnvm.md
Department of Privatization www.privatization.md
2004-ORIGINS OF GROSS DOMESTIC PRODUCT (%)
Services
Industry
2005-COMPONENTS OF GROSS DOMESTIC PRODUCT (%)
Agriculture & fishing
Construction
Private consumption
Increase in stocks
21.3
100
54.3
Public consumption
Net exports
91.6
80
19.1
60
40
20
4.8
16.9
24.4
5.4
0
-20
-40
-60
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Gross fixed investment