Economic Policies on March 1–15, 2011

Prices and inflation

Prices growing continuously…

According to NBS the consumer price index (CPI) in February compared to January 2011 was 101.2%, and to February 2010 — 105.5%. Thus, from 1 January until 1 March 2011 prices grew by 2.3%. The increase of average consumer prices in February compared to January this year was driven by increased prices of food products — by 1.1%, non-food products — by 0.2% and of tariffs for public services — by 2.6%.

During the analyzed period more significantly increased the prices for potatoes — by 14%, vegetables — more than 4%, milk and dairy products — by 3.5%, fresh fruits — 3%, vegetable oil — 2.5 % and various grits — by more than 2%. The services rendered to population in the reported month noted a higher increase of tariffs for: housing maintenance services — by more than 5% (including tariffs for central heating — by 21.5%, the supply of natural gas by centralized pipeline network — by 5.5% and drinking and technical water supply — 3%). In fact, agricultural prices have increased most of all for the year 2010 (by about 43% compared to 2009), which has also generated the growth for other food products. The biggest increase was recorded for vegetable products — about 58%, and for those of animal origin by about 5%. According to a report by the World Economic ForumRO, the more restricted resources of fundamental elements, such as food, are the major threats for this year. The strong growth of food and energy prices already raised warning signs of inflation in many countries and the situation will further deteriorate due to increased incidences of extreme weather phenomena, increased need of resources and widespread financial speculation.

Labour market

In 2010 salaries of Moldovans have been eroded by inflation…

According to the NBS data the 2010 average monthly wage in the national economy was about 2972 lei (about 250 USD) and in 2009 it rose in nominal terms by 8.2%, but in real terms (adjusted to CPI) the salary rose by only 0.7%. We could conclude that the revenues of the population were thinned by inflation that has exceeded 8% for 2010, so that the population’s purchasing capacity has decreased. Highest wage levels have been recorded in such activities as: banking and financial services — 6368 lei, electricity and heating, gas and water — 4857 lei, transport and communications — 3914 lei, real estate transactions — 3755 lei, constructions — 3248 lei etc. Below the national average line were the salaries in: education — 2361 lei, hotels and restaurants — 2315 lei, agriculture, hunting and forestry — 1640 lei, pisciculture — 1620 lei. The average monthly salary in public sector reached the absolute value of 2552 lei, which is 15% lower than the national average, while the salary in real sector was about 3211 lei. The good news for public employees, particularly those in education, is that from April 1 and September 1 they will increase by 12,5%.However, practically the income of employees in state institutions will remain lower than what they had one year ago.

International Economics

Asian countries are credited with the highest growth rates over the next 20–30 years…

According to a report by economists of Citigroup such economies like Nigeria, India and Iraq will have the highest economic growth rates till 2050, as quoted by the newspaper ECOnomist. Below is a graphical representation of the ten economies of the world (mostly Asian) which according to forecasts will have stable economic growth between 6.5 to 9.5% in the next 20–30 years.

1: Nigeria

Annual growth rate: 8.5%;
GDP 2050: USD 9.500 billion;
Nigeria’s labour force will increase with 123% over the next four decades, and quarrying industry will increase its share in GDP, capitalizing the country’s natural resources. The private sector is relatively developed, but improvements are needed in the health system, including for increasing the life expectancy.

2: India

Annual growth rate: 8%;
GDP in 2050: USD 86.000 billion;
India has the potential to become the world’s largest economy by 2050, but it should focus on infrastructure development and to allow the lower castes and women in rural areas to have access to education.

3: Iraq

Annual growth rate: 7.7%;
GDP in 2050: USD 2.200 billion;
Country’s after war recovery can lead to an annual growth of 11.7% over the next five years. In the next four decades the working population will increase with 143%, and the oil and natural gas resources could finance massively the investments in infrastructure.

Asian countries are credited with the highest growth rates over the next 20–30 years

e-democracy.md