At one one the lattes Cabine meetings, the Prime-minister Tarlev announced the new data on budget execution. With total receipts exceeding 1.33 billion MDL, the quarterly plan for budget execution has been exceeded by 2.2 percent as of 22 of March. At the same time, the Central Bank has kept unaltered its policy tools. How adequate and consistent are current macroeconomic policies is a subject of this edition of the Business and Economy Review.

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As electoral competition heats up, Moldovan authorities are more inclined to use administrative and indicative policy tools in the economic policy. Inter alia, the Ministry of Finance received indications from the President on financing of new social priority spending. The economic implications and risks of the political interferences are part of the analysis undertaken in this edition of the Business and Economy Review.

The EXPERT-GRUP's previous expectations regarding negative outlook of the Moldovan economy has been confirmed by the quarterly and monthly economic data recently released. As Real Economy no.29 proves, the economic activity is on the downside, while social effects are clearly visible, including on the labor market.

Full version is available only in Romanian.

The economic leading indicator (ELI) continued its downward trend in February, revealing the cooling down of the Moldovan economy, which might persist in the near future. Thus, the indicator decreased by 1.1 p.p., which has been determined by declining exports and halving the growth rate of remittances. As a result, the repercussions of the Eurozone sovereign debt crisis are already visible in the Moldovan economy, which consist in cooling the foreign demand and increased tensions on the EU labor market.

Full version available only in Romanian.

The slowdown in the economic growth is becoming more obvious, as over the last quarter of 2011 the retail trade and services provided to firms embarked on a downward trend. We anticipate that 2012 will be a very difficult year for Moldova. The external environment, which had been so favorable during the last 2 years, poses significant risks, both economical and political, for our country.

At the end of the year, the statistical data denote a less favorable situation for the Republic of Moldova, with risks turning into real facts and lowering economic performance . All the GDP components slowed down their growth paces, the biggest contribution owing to the stagnation of the investment activity. Thus, both local and foreign investors became more reluctant, investing less and less in the recent months. Although the final consumption is consolidated its position as the most important economic growth determinant, it nevertheless remains sensitive to regional economies’ fluctuations and grew at a lower rate during the third quarter of 2011.

This is the fourth annual economic radiography made by the Independent Think-Tank EXPERT-GRUP. We find that the economic growth in 2011 was strong and improved structurally, but consumption continued to be the main growth factor. While the AEI-2 member parties spent most of the time in controlling and checking each other, the prices kept rising and the external risks got even more acute. The strong economic growth in 2011 was accompanied by a high inflation which did not hinder the growth of bank loans and the Government promoting the policy of a lower budget deficit. But the macroeconomic successes were poisoned by new corporate scandals with major economic, social, and political impact. The publication presents the most important economic trends and risks, as well as the most successful and erroneous economic policies in 2011.

The most important issues covered by the this issue of the Real Economy are related to the consumers’ rights which have recently became a heated topic of discussion, the main financing sources of consumption, the causes of lowering the growth of budgetary revenues, as well as the trade expansion.

As this issue of the Real Economy shows, we are living a hot political autumn, despite the cold weather outside. This correlates with some warring economic trends nationally and regionally. Important issues covered in this edition are related to the slow and deficient process for competition legislation, the implications of the new fiscal policy, as well as the risks hampering the positive trend in foreign trade followed during the recent months.

On the first sight the Moldovan economy is flourishing. Not only had Moldova  had a high economic growth in Q2'11, but, more importantly, it looks like a healthy growth. However, it is much easier to recover, even at a high rate, than to keep a healthy growth in the long-term. In this respect, as shown in this edition of the Real Economy, the Moldovan economy is still fragile, with serious weaknesses and challenges lurking in the shadows.