Moldova - Economy



At 51% of GDP in 2000, services comprise the most important sector of Moldova's economy, while agriculture accounted for 28%. The country's wide range of crops provides significant export revenue and employment.

Moldova has no major mineral deposits and must import all of its supplies of coal, oil, and natural gas. Since the breakup of the Soviet Union in 1991, energy shortages have contributed to sharp production declines. Moldova is seeking alternative energy sources and working to develop its own energy supplies including solar power, wind, and geothermal. The country is implementing a national energy conservation program.

In 1998, the Moldovan economy experienced an 8.6% decline due primarily to fallout from the financial crisis in Russia, by far its biggest export market. Continuing financial turmoil in Ukraine and Romania hurt Moldova's exports, which were needed to pay for imports of fuel from these countries. About one-fourth of Moldova's external debt burden, which peaked at 75% of GDP in 2000, is traceable to energy imports from Russia, which has on occasion suspended gas supplies, and from the Ukraine and Romania, both of which have on occasion suspended electricity power to Moldova. Further isolation occurred in 1999 when the IMF halted loans following the refusal of the Moldovan parliament to carry out privatization plans. By year's end, the Moldovan economy had contracted to roughly one-third of its 1989 level, with end of period inflation soaring to 45.8%. In 2000, the contraction was halted with real GDP growth of 2.2%, and in December, the government entered into a three-year arrangement with the IMF under its Poverty Reduction and Growth Facility (PRGF). Although average inflation for 2000 was 31.3%, by the end of the year the rate had moderated to 18.5%. In 2001 and 2002, inflation has been reduced to single digits: 6.4% and 8%, respectively, according to preliminary estimates. Real growth was 6.1% in 2001 and an estimated 4.8% in 2002. The external debt burden had eased somewhat to 58% of GDP.

The GDP purchasing power parity was $11.3 billion (est.) in 2001 with GDP per capita for that period at $2,200 (PPP), down $100 from 1998.

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