Economic Policies on October 1–31, 2010

Macroeconomy

The National Bank of Moldova has updated the economic growth forecasts. According to the last monetary policy communiqué released on October 28, the central bank says that the economic growth would be by 1.6 percentage points higher than forecasted in August. Therefore, an economic growth of about 5.0% is expected in 2010. As well, NBM updated by 0.1 percentage points the forecast for 2011, up to 3.4%. As for inflation, NBM experts forecast that it would reach about 7.8% by the end of 2010, which would be by 0.4% less than estimated by the Monetary Policy Report released in August. In 2011, inflationist pressures will be particularly linked to a rise in foodstuff prices and regulated prices. This fact would place the inflation at a level of about 7.5%. A 5-percent annual inflation rate would be recorded in 2012. According to official statistics, the inflation rate in September 2010 was 8.0%, compared with September 2009.

It is worth reminding that the Gross Domestic Product in the first half of this year turned over 31,720,000 lei in current market prices, and increased by 5.6% in real terms, compared with January-June 2009. Commodity taxes (including customs fees) collected to the national public budget exceeded by 14.8% the level of the similar period of the last year, contributing with 2.4% to the Gross Domestic Product. The overall final consumption increased by 3.6%, compared with the similar period of the last year, particularly due to a 4.3 % rise in final household consumption.

Industry

Evolutions in industrial sector, in January-September 2010 confirmed the recovery trends of Moldovan economy after the 2009 crisis. The National Bureau of Statistics indicates a rise of industrial output by 6.3%, compared with the similar period of last year, up to 18,666,600 lei in current prices. The industry achieved a more spectacular rise in September 2010, by 13.9%, than in September 2009. Developments in industrial sector were particularly encouraged by processing industry, which increased by 7.5%. Important rises were also recorded by cloth manufacturing — by 9.8% (covering 10.4% of industry, it contributed with 1.0% to the overall industrial growth); winemaking by 15.0% (covering 6.9% of industry, it contributed with 1.0% to the overall industrial growth); tobacco manufacturing by 41.4% (covering 2.6% of industry, it contributed with 0.8% to the overall industrial growth); dairy manufacturing by 8.8% (covering 5.5% of industry, it contributed with 0.5%); distilled spirits by 15.3% (covering 2.7% of industry, it contributed with 0.4%); footwear manufacturing by 21.8% (covering 2.2% of industry, it contributed with 0.4%), etc. On the other hand, the fat, and vegetal oil and tallow manufacturing decreased by 13.8%; glass, cement, lime and plaster manufacturing, concrete, plaster and cement items, etc. decreased by 4.6%; finished metal manufacturing, excluding engineering by 22.7%, etc.

Industrial output, January-September 2010

	Value of industrial output, in current prices, million lei	Production volume indicators in January-September 2010, compared with January-September 2009 in comparable prices, %	Share in overall value of production, in comparable prices, %	Influence of variation of prices (+/-) on general production index, %	For information: January-September 2009 compared with January-September 2008, in comparable prices, %
Industry — overall	18666,6	106,3	100,0	+6,3	75,7
Extractive industry	248,5	97,7	1,5	-0,0	67,6
Processing industry	12190,1	107,5	85,7	+6,3	73,7
Electricity and heating manufacturing and supply	2232,2	100,0	12,8	+0,0	95,5

Source: NBS

Agriculture

The agriculture makes progress, too, as it achieved a 8.7-percent growth in nine months of this year, compared with the similar period of 2009. The rise was due both to the growth of animal production (by 15.5%), and vegetal production (by 4.4%).

Rates of overall agricultural production in January-September 2010, compared with the similar period of the precedent year (in %):

	2006	2007	2008	2009	2010
Overall agricultural production	96,0	79,1	127,3	89,8	108,7
Of which:
Vegetal production	91,1	67,6	176,9	83,0	104,4
Animal production	105,2	99,5	79,6	108,6	115,5

Transport

On October 29, Moldova and the European Bank for Reconstruction and Development signed a 75-million-euro credit agreement for road renovation projects. This is the largest EBRD investment ever seen for a project in Moldova. The first tranche of 27 million euros is designed to rebuild two 55-kilometre-long road sectors on Chisinau-Giurgiulesti route, between cities of Comrat and Ciumai. The same route provides access to the Danube and Black Sea. Other tranches worth 25 and 23 million euros will be used to renovate 170-kilometre-long roads crossing Moldova, from Hincesti to Slobozia Mare, as well as from Hincesti to Cimislia. The project is to be funded jointly with the European Investment Bank. Overall, EBRD has invested 99 million euros in Moldova’s transport infrastructure until now.

As for the transport sector in general, it is also recovering on background of important growths in industry and agriculture. This sector is recovering after having suffered hard in 2009. In particular, the transportation sector increased by 21.4% in September 2010, compared with the similar period of 2009. Overall, transportation enterprises (motor, rail, fluvial and air) carried 5,674.1 tons of cargos in January-September 2010. This rise was particularly due to progresses made by air transport companies (+44.4%) and motor transport enterprises (+27.7%).

Transportation enterprises carried 2,133,400 tons of cargo per km, by 11.1% more than in January-September 2009.

Volume of carried commodities and cargo drive performed by transportation facilities on transportation categories

	January-September 2010	In % compared with January-September 2009	September 2010
	January-September 2010	In % compared with January-September 2009	in % compared with August 2010	in % compared with September 2009
Carried commodities — total, thousand tons	5674,1	101,8	124,9	121,4
Of which on transportation categories:
rail	2580,2	83,7	113,5	92,7
motor²	2997,0	127,7	136,9	159,3
fluvial	96,1	68,4	66,2	51,1
air	0,84	144,4	80,4	143,7
Cargo drive — total, million tons-km	2133,4	111,1	116,4	111,9

Trade and services

Trade facilities sold consumer goods worth 17,969,900 lei to population in January-September 2010, achieving an 8.2-percent rise in real terms, compared with the similar period of 2009.

The commodity stocks of trade facilities were worth 6,490,300 million lei, as of October 1, 2010, by 9.0% more than on October 1, 2009.

In January-September 2010 formal enterprises provided pay-for services worth 10,605,000 lei to population, achieving a 5-percent rise in comparable prices, compared with the similar period of 2009.

Foreign trade

Exports turned over 862.2 million dollars in January-August 2010, by 9.2% more than in the similar period of 2009. Supplies to the European Union (EU-27) turned over 418.1 million U.S. dollars (by 1.3% less than in January-August 2009), covering 48.5% of overall exports (53.6% in January-August 2009). CIS member countries absorbed 38.2% of Moldovan exports (36.2% in January-August 2009), or commodities worth 329.3 million dollars. Supplies to CIS members increased by 15.3%, compared with January-August 2009. An analysis of evolution of exports on countries reveals that majority of supplies to the Russian Federation (+26.4%), Turkey (2.6 fold), the United Kingdom (+45.5%), Greece (+82.3%), the United States (+96.1%), Ukraine (+7.8%), Italy (+3.5%), Georgia (+63.5%), Libya (15.7 fold), Poland (+11.8%), Iraq (+73.9%), the Czech Republic (+65.0%) and Syria (+72.8%) contributed with 16%t to the overall export growth. On the other hand, exports to following countries have decreased: Romania (by 11.8%), Germany (by 14.9%), Switzerland (by 38.4%), Belarus (by 6.7%), France (by 22.4%), Uzbekistan (by 37.2%), Netherlands (by 11.5%) and Slovakia (by 10.6%), reducing the overall export growth by 5.2%. The imports turned over 2,291,600 million U.S. dollars in January-August 2010, by 14.8% more than in the similar period of 2009. Imports from the European Union (EU-27) amounted to 1,028,800 million U.S. dollars (by 18.9% more than in January-August 2009), covering 44.9% of overall imports (43.3% in January-August 2009). Imports from CIS member states were worth 722.3 million dollars (by 0.1% more than in January-August 2009), which is equivalent to 31.5% of overall imports (36.2% in January-August 2009). An analysis of evolution of imports on countries reveals that majority of supplies from China (+36.5%), Romania (+22.8%), Ukraine (+13.7%), Greece (2.1 fold), Brazil (4.2 fold), Italy (+16.5%), Germany (+12.0%), the United States (+66.5%), Turkey (+13.8%) and Poland (+21.9%) contributed with 14.1% to the overall import growth. The rise of imports from the Russian Federation (+68.5%) was particularly due to the resumption of Russian natural gas supplies in April 2009 (Kazakhstan was declared the origin country of imported natural gas in January-March 2009).

The important gap in evolution of exports and imports accumulated a trade balance deficit of 1,429,400 million dollars in January-August 2010, by 222.5 million dollars (+18.4%) more than in the similar period of 2009. The trade balance with the European Union (EU-27) recorded a deficit of 610.7 million dollars (441.6 million dollars in January-August 2009), and 393.0 million dollars with CIS member states (435.9 million dollars in January-August 2009).

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