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 Monitoring→Economy→The Socioeconomic Environment

Economic Policies on May 1–16, 2008

Prices and inflation

Inflation jumping forward new peaks…

The Consumer Price Index (CPI) rose by 1.6 percent in April, compared with March, and the cumulated rate for four months of this year was by 5.8 percent higher than in December 2007. Prices of food products have grown the most, by 2.8 percent, prices of manufactured goods increased by 0.2 percent and tariffs for services provided to population advanced by 2.2 percent. In particular, meat prices have grown by 9.4 percent, rice by 10.6 percent, vegetal oil and eggs by 5.6 percent. Prices of building materials have increased by 2.4 percent. At the same time, tariffs for interurban motor transportation services rose by 34.7 percent in April (as new tariffs entered into force on April 1, 2008).

IMF experts who are on a working mission to Moldova on May 7–21 have raised concern with the high inflation rate. They have recently stated that the currency surplus in economy is a reason of the high inflation rate in Moldova. They noted that the currency rate has increased by over 40 percent last year and exceeded 27 billion lei. Fulfilling the objective of a low and stable inflation has become complicated on a short term after the recent rise of prices of food products. This occurs because, as expected, the so-called “initial impact” of higher prices of food products has modified the general level of prices.

Foreign trade

Trade deficit up to half of country’s budget in 1st quarter of 2008…

The trade balance deficit rose by more than 44 percent in the 1st quarter of 2008, compared with the similar period of 2007 or by over 214 million dollars, up to about 700 million dollars, which is equivalent to half of the state budget. The trade balance with the European Union reached a deficit of 283 million dollars and it exceeded 245 million dollars with the CIS. Imports have grown by about 38 percent and exports by 26 percent.

Overall, exports turned over about 347 million dollars in the first quarter. On the other hand, imports were worth about 1.046 billion dollars. Thus, the import/export coverage rate was 33.2 percent in January-March 2008, compared with over 36 percent in the 1st quarter of 2007, with imports exceeding exports threefold. According to estimates by economists, the trade balance deficit will reach about 3 billion dollars by the end of this year.

Moldovans send home more and more money…

Moldovans working abroad have sent more than 314 million dollars via commercial banks in the 1st quarter of 2008, which is by 33 percent more than in the similar period of 2007. According to NBM accounts, more than 74 percent of transfers in the period concerned came via rapid transfer systems. Thus, remittances accounted to nearly 123 million dollars in March only, or by 17 percent more than in February 2008.

Experts say that money transfers exceed official statistics in reality, with Moldovans also using alternative methods besides banks to send money. According to NBM statistics, remittances have grown by 35–40 percent a year from 1999 to 2007, so that official transfers have advanced about 14-fold in 1999–2007.

April 16–30, 2008 May 17–31, 2008