The main economic forecasts for 2021 - a year marked by the pandemic extension and political instability

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Publishing date: Wednesday, 17 February 2021
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Pandemic developments and political instability are the main economic risks in 2021. On the one hand, we can expect a relatively high economic growth (+5,4%), but on the other hand, the economy will be relaunched without investments and with a high budgetary deficit. This conclusions and forecasts have been made by the authors of MEGA Publication, 22nd edition, for the 1st quarter, of 2021

Adrian Lupusor, Executive Director, “Expert-Grup”:The relaunch in the agriculture sector and the expected economic relaunch in the region will be the main engines for the economic growth in 2021. Also, there is the effect of the low comparison base, which pure arithmetical could create conditions for an economic growth of 5-6%. The downside is that the economy will increase in the context of an investment activity compression, both in the public and private sectors. Although the economy will grow, we can’t expect also an employment increase. The GDP will be driven by the final consumption, which will increase by 8.3%, and the growth of exports, that will be faster than that of imports”.

The authors of MEGA Publication, 22nd edition, consider that the Government should urgently implement a comprehensive package of support measures for companies and the population, which would also support the economic recovery in 2021-2022. The main sources of funding can be: state securities (about 300 million EUR), issuance of Eurobonds (about 500 million EUR), municipal bonds (about 50 million EUR), foreign assistance (about 150-200 million EUR).

“The European Union (EU) continues to offer its support to the economy and business sector in the Republic of Moldova. Following the Covid 19 pandemic, the EU announced an emergency support package for the Eastern Partnership countries working closely with International Financial Institutions (IFIs) and relevant financing institutions from EU Member States as Team Europe. The short-term response to the crisis focuses on increasing support to SMEs, while also planning for tackling long term consequences, and here the role of civil society organisations is vital”, have said Gintautas Baranauskas, Deputy Head of Operations Section at EU Delegation to the Republic of Moldova.

The main economic forecasts for 2021, according to the authors of MEGA Publication, 22nd edition

- Given the mobility restrictions in place, the year 2021 will be difficult for the hospitality and tourism sectors, with a level of activities still far below the figures before the pandemic. Further application of the single tax in the case of IT Park residents, as well as the acceleration of digitization trends, will keep the country's IT sector on an upward trend in 2021;

- Most businesses expect a return to optimal sales in the second half of 2021;

- For 2021, we forecast an income growth due to the economic recovery, by 1.7% for wages and by 3.3% for pensions;

- Final consumption will increase rapidly, by 8.3% - this growth will reflect the income growth on the one hand and the statistical effect of the low comparison base on the other hand;

- Financial intermediation will grow in 2021, as the companies need capital to improve their financial position affected by the crisis;

- We anticipate an increase in lending to legal entities amounts to 10%, while for consumer loans or real estate loans it might exceed 15%;

- We anticipate a slow upward trend in prices and the annual inflation rate will amount to 2.6%;

- We estimate an annual increase of exports of Moldovan goods and services of about 9.6% by the end of 2021, as well as an annual increase of 6.8% of imports of goods and services.

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The MEGA Publication, the 22nd edition, is realized within the project “Inform, Empower, Act. Civil Society for good budgetary governance in Moldova”, funded by the European Union and Konrad Adenauer Stiftung and implemented by the Independent Analytical Center “Expert-Grup” as lead applicant, the Institute for European Policies and Reforms (IPRE) and the Eastern European Studies Centre (EESC) from Vilnius, Lithuania. 

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