Economic Policies on June 1–15, 2011

Prices and inflation

Inflation rate — more or less acceptable…

According to NBS data, the consumer price index (CPI) in May was 100.6 percent compared with April 2011 and 107.0 percent compared with May 2010 (for information, CPI in May 2010 was 100.1 percent compared with April 2011 and 107.9 percent compared with May 2009). Prices increased by 4.9 percent this year (in May 2011 compared with December 2010). Therefore, the inflation rate for the first five months of this year is about 5 percent.

The rise of average consumption prices in May compared with April 2011 was particularly related to dearer manufactured goods by 0.5 percent and tariff for public services by 1.2 percent. Dearer food products were a consequence of the rise of prices of fresh vegetables and fruits in particular. Prices of industrial products in general increased by 1.1 percent in May 2011, compared with April and by more than 5 percent compared with December 2010. Prices of following manufactured goods increased the most in the period concerned: building materials by 2.2 percent, fuels by 1.8 percent, and household chemical products by 1.5 percent. Tariffs for following public services for population increased in May: electricity for householders by more than 6 percent, interstate railway transportation by more than 5 percent, and foreign tourism and leisure services by about 4 percent.

Macroeconomy

GDP goes up, but those who are downstairs shall feel it as well…

Moldova achieved an 8.4-percent economic growth in the 1^st quarter of 2011, which is a pretty high level among countries in the region. The Gross Domestic Product exceeded 16.78 billion lei. The gross value added in the commodity sector increased by 8.2 percent compared with the similar period of last year. The gross value added in the service sector increased by 6.7 percent. Taxes on products contributed with about 18 percent to the GDP. The final consumption increased by nearly 10 percent. The gross fixed capital formation exceeded by about 25 percent the level recorded in the similar period of the precedent year, contributing with more than 12 percent to the GDP in the period concerned. Commodity and service exports and imports increased by more than 30 percent and approximately 26 percent respectively. IMF estimates a 4.5-percent economic growth for Moldova for 2011.

Banking system

Banks tempered their activity in May…

Value of intra-bank credits/deposits dropped 4.8-fold in May compared with April, down to 32 million lei, compared with about 154 million lei in April. The average nominal rate for the bank instruments concerned increased by 1.6 percent up to 8.5 percent a year. The medium credit/deposit contract term was 35 days, compared with 9 days in April. Banks carried out securities sale deals worth 1.8 million lei only in May, and did not perform any purchase deals, compared with 2.8 million lei in April. The average nominal rate on securities increased by 0.67 percent in May compared with April, up to 11.33 percent a year.

Foreign trade

Imports exceed exports…

According to the same source, Moldova’s exports accounted for about 176 million dollars in April 2011, by nearly 4 percent less than the last month and by about 78 percent more than in April 2010. Exports turned over 654 million dollars in January-April 2011, by 63 percent more than in the similar period of 2010. Commodity exports to the European Union (EU-27) amounted to 331.6 million dollars (by 65.7 percent more than in January-April 2010), covering about 51 percent of overall exports (about 50 percent in January-April 2010). CIS member countries absorbed about 38 percent of Moldova’s exports (more than 39 percent in January-April 2010), which is equivalent to about 247 million dollars. Exports of goods made in Moldova to this area increased by about 57 percent compared with January-April 2010.

Imports in April 2011 exceeded 421 million dollars, by nearly 8 percent less than the precedent month and by 44 percent more than in April 2010. Imports exceeded 1.52 billion dollars in January-April 2011, by about 44 percent more than in the similar period of the precedent year. Imports from the European Union (EU-27) amounted to over 643 million dollars (by 44 percent more than in January-April 2010), covering more than 42 percent of overall imports (the same share was recorded in January-April 2010). Imports from the CIS area were worth 541 million dollars (by 44.5 percent more than in January-April 2010), which is equivalent to 35.6 percent of overall imports (35.4 percent in January-April 2010).

The serious difference in evolution of exports and imports contributed to a trade balance deficit of about 866 million dollars in January-April 2011, by over 211 million dollars (32.2 percent) more than in January-April 2010. Moldova’s trade balance with the European Union (EU-27) had a deficit of about 312 million dollars (246.2 million dollars in January-April 2010) and 294 million dollars with the CIS.

e-democracy.md