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The optimism of economic growth, shattered by political struggles and diminishing the rhythm of growth of remittances

2017.08.07 Economie Victor Ursu Print version

The 4.5% economic growth announced by the IMF for 2017 could be shattered by excessive government debt, maintaining trade restrictions on the Russian market, diminishing the rhythm of remittances and worsening the image of the Republic of Moldova in international clashes on fighting corruption. It is the opinion expressed by journalist Vlad Bercu on the show "15 minutes of economic realism".

The IMF announced that it has unlocked a new installment of $ 21.5 million from the $ 179m loan. However, the decision to unblock the tranche comes a few weeks after the Fund revised its economic growth forecast for the Republic of Moldova to 4.5% compared to 3.5% as previously estimated.

"The growth of Moldova's economy, according to the forecast, will be double the CIS average (1.7%). Estimates are optimistic, and the IMF binds the growth of reforms, political and economic stability. Also, an important factor is the increase in investments in long-term assets and the encouraging statistical data from the beginning of the year: increased remittances, exports, and imports ", Vlad Bercu explained.

The Republic of Moldova needs a higher growth than the announced 4.5% to reach the level of the states in the region.

The journalist lists a number of factors that would hurt optimistic economic growth forecasts. These are money remittances, which although they have a positive trend since the beginning of the year, the growth rate is decreasing. Finally, we can expect a reduction in consumption that stimulates economic growth. Another factor is the excessive increase of the domestic debt to 51 billion lei as a result of the conversion of the Government guarantee for the emergency credit granted to the devalued banks. Debt puts pressure on economic growth. "We are also talking about trade restrictions on the Russian market, although some of the state institutions are talking about a resumption of exports, things are steadfast. An impediment to economic growth is the political confrontation between the government and President Igor Dodon on his initiative to organize the referendum, but also the worsening of the country's image in the international indexes on the corruption index, which discourages investments, Bercu believes.

In conclusion, Vlad Bercu stated that it remains to be seen whether the Republic of Moldova will achieve a 4.5% economic growth as forecasted.

The show is made by IDIS Viitorul in partnership with Radio Free Europe.

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