GDP, current US$ billion
GDP per capita, current US$
Life Expectancy at birth, years
Despite a solid economic performance over the past two decades, Moldova remains among the poorest countries in Europe. Although a growth model reliant on remittance-induced consumption has generated high growth and reduced poverty, it had become less sustainable well before the recent series of crises. The decline in remittances, combined with a shrinking and aging population, has resulted in low productivity growth, and a significant number of the lower-income population has become dependent on pensions and social assistance.
The pandemic, the energy crisis, and most recently, the refugee crisis caused by the Russian invasion of Ukraine starkly exposed the vulnerabilities of this growth model to shocks. Moldova is one of the countries most affected by the war in Ukraine, not only because of its physical proximity but also because of its inherent vulnerabilities as a small, landlocked economy with close linkages to both Ukraine and Russia. The influx of refugees to Moldova has resulted in additional fiscal costs, squeezing resources for long-term development priorities. The large wave of refugees has also created a challenging socioeconomic environment in the medium term, especially if many migrants remain but fail to find employment opportunities.
Heavy reliance on imports to meet food and energy needs has left Moldova vulnerable to disruptions in the supply of food, energy, and commodity imports from Ukraine and Russia. Additionally, Moldova continues to be critically reliant on natural gas imported from Russia, including for powering its energy needs. Import disruptions are expected to further increase price pressures, in turn eroding the competitiveness of firms and household incomes, especially for the poor.
As economic activity continues to shrink due to shocks from the war in Ukraine and the ongoing impacts of the COVID-19 pandemic, the Government, which has a strong mandate, parliamentary support, and trust among citizens and international partners, must find ways to mitigate the immediate economic impact while maintaining momentum on the long-term agenda. At the current economic juncture, it is paramount that short-term recovery measures are complemented by long-term reforms that will help steer the economy away from the current economic model.
These efforts will now be bolstered by the European Council’s recent decision to grant European Union Candidate country status to Moldova. The new 2023-27 World Bank Country Partnership Framework for Moldova is designed to provide key elements to support the country in its efforts to transition to a new growth model, delivering targeted activities that respond both to the immediate crisis and to address Moldova’s longer-term development agenda with the goal to advance the agenda toward EU accession.
Last Updated: Oct 10, 2022