Economic Policies on November 16–30, 2009

Labour market

Positive statistics over difficult times…

According to BNS data, the average monthly wage on economy amounted to about 2,700 lei (245 dollars) in January-October 2009 and increased by nearly 9 percent, compared with the similar period of the last year. The real wage in the period concerned increased by 9 percent. The average salary in budgetary sector of economy accounted for 2,341 lei (213 dollars) and increased by 22 percent, compared with the similar period of 2008, while average wage in real sector amounted to about 2,903 lei (264 dollars) and rose by 5 percent, compared with the similar period of the last year.

The average remuneration of a worker in October was 2,686 lei (244 dollars). In comparison with October 2008, the average monthly wage has increased by about 3 percent and real salary by 4.6 percent. The average wage in real sector amounted to 2,890 lei (263 dollars), and decreased a little compared with last year. The medium salary in budgetary sector amounted to 2,334 lei (212 dollars) and increased by more than 13 percent compared with the similar period 2008. Diagram 1 reveals the share in percent of average wages in different sectors in the average salary on economy.

Diagram 1. Medium wages on sectors, in % of the average on economy (Jan.-Oct. 2009)

Source: BNS data and estimates by author

The average wage on economy in 2010 is expected to amount to 2,950 lei, by 200 lei more than expected by authorities this year. According to forecasts, the average monthly wage will amount to 2,750 lei by the end of this year.

Banking system

Difference of interests on credits and deposits is relatively big on system…

Banks do not reduce the interest rates on credits proportionally with the reduction of interests on deposits on background of some relatively instable situations in banking sector. The difference of interests between credits and deposits has increased more than 2.5 fold this year, as the interest rate on deposits grew faster than on credits, both in lei and in foreign currency. Five out of 15 certified banks were suffering losses after nine months, while incomes on banking system have dropped ten fold, so that banks try to enhance their profit, and lowering the interest rate on deposits quicker than on credits is the easiest way to do it, according to financial analysts and bankers.

Profitableness and shareholder capital indicators have seriously fallen. The share of disadvantageous credits in overall loans has increased more than twofold, up to about 13 percent in late September. As well, the margin between interests on credits and deposits in lei has increased up to 8.27 percentage points, from about three percentage points in the first two months. The difference between interest rates on credits and deposits in foreign currency has deepened much, from 1.39 percentage points in January and 2.39 percentage points in February up to 7.01 percentage points in September.

In spite of relatively more discouraging appearances for depositors, the latter keep making savings in banks. In particular, new forward deposits of people went up to 2.53 billion lei (230 million dollars) in September, and exceeded a little the savings for August. One may just suppose the level of deposits, if the rates recorded early this year were maintained. After having got large available liquidity, the banks cannot afford any longer to lend expensive loans, which borrowed by businesses and individuals would be surprising. (www.businessexpert.md)

Real sector

Industry is on the decline…

Formal data reveal that all industrial enterprises manufactured production worth over 18.44 billion lei (1.67 billion dollars) in current prices in January-October 2009. The industrial output index was 75.9 percent in comparable prices compared with January-October 2008 (this indicator was 75.7 percent in January-September 2009). This indicator was 77.4 percent in October 2009, compared with October 2008.

The decline in industrial output, compared with the similar period of 2008, was linked to the fall in production of extractive industry by 32.2 percent, processing industry by 26 percent, energy industry by 4.8 percent, which reduced the overall production volume by 0.6 percent, 23 percent and 0.5 percent respectively.

The decline in overall industrial output in the period concerned was linked to the fall suffered by enterprises manufacturing non-ferrous goods (glass, cement, chalk and plaster, concrete, plastic and cement items etc.) by 41.6 percent (they cover 9.7 percent of overall industrial output); enterprises manufacturing clothes by 14.2 percent (hold a share of 9.6 percent); winemaking by 23.9 percent (share of 7.1 percent); dairy making by 8.9 percent (share of 5.5 percent); producing, processing and canning of meat and meat products by 21.4 percent (share of 4.5 percent); fruit and vegetable processing and canning by 39.0 percent (share of 3.5 percent), manufacturing of distilled spirits, textiles etc.

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