Moldova - Future trends

The economic future of Moldova depends on the successful completion of its reforms, the future strength of the Russian and Ukrainian economies, and the successful accession of Romania to the European Union, since these 3 countries receive 70 percent of its exports and supply almost all its energy. Prior to elections in 2000 Moldova appeared to be heading toward greater trade relations with the international community, but the ascension to power of the Communist Party of Moldova (CMP) puts such engagement in doubt. The CMP's control of government may reduce political instability, particularly regarding the Transnistria stand-off, but any slowing of economic reforms could limit GDP growth to 3-3.5 percent a year while possible fiscal and monetary liberalization may cause 20 percent inflation in 2001. The more pro-Romanian and pro-European direction of centrist foreign policy may give way to closer ties and even integration with the Russian-Belarusian union.

The CPM may also run contrary to the IMF agreement with its renewed price controls and state monopoly over the wine and tobacco sectors; it is unlikely, however, that the general direction of reform toward a market economy will be reversed. Moldova has good long-term growth prospects in terms of geographical location, resources, and a skilled workforce, but has a long way to go before an operational market economy could create the sustainable ground for improved living standards for the majority of the people.