Moldova has had relatively rapid economic
growth since the turn of the millennium, but it has come
from a very low level. It is still one of Europe's
poorest countries, with large social and economic gaps
in society. Agriculture as well as the food industry and
export are important industries. Corruption is a
widespread problem that damages economic development.
In rural areas, most molds live on what their own
land can provide, as well as on sales in the local
market. Many city residents try to do different kinds of
black jobs. The informal sector of the economy is
estimated to be close to one third of the country's GDP.
Major imports by Moldova, covering a full list of top products imported by the country and trade value for each product category.
For those who have a formal employment, the low wage
situation is a major problem. As a result, emigration in
search of work is common. The foreign-working Moldavians
are estimated to account for almost a quarter of GDP.
The existing industry is dependent on agricultural
production and is dominated by the production of food
and agricultural implements. Wine and rose oil go on
export. However, the service sector has grown strongly
in recent years, accounting for two-thirds of GDP in the
mid-2010s and employing just over half the workforce.
Economic problems with historical roots
The dissolution of the Soviet Union in 1991 triggered
a deep and protracted economic crisis. During the Soviet
era (1944–1991) Moldova had supplied the rest of the
Union with fruit, tobacco and wine and bought cheap
natural gas and oil from Russia. When trade exchanges
within the Union collapsed, the country's traditional
export markets were lost.
Abbreviationfinder.org: Check this abbreviation website to find three letter ISO codes for all countries in the world, including MDA which represents the country of Moldova.
At the same time, Moldova faced major problems with
its energy supply. When Russia began to take world
market prices for its energy exports, Moldova found it
difficult to pay the costs. Fuel shortages occurred and
the result was, among other things, major production
declines in agriculture and industry. GDP more than
halved between 1991 and 1994. The civil war in
Transnistria (see special chapter) contributed to the
collapse, partly because most of the industry was in the
state of disruption and thus lost to Moldova.
In the early 1990s, economic reforms began with
market economy as the goal, but the changes were slow.
At the end of the same decade, a number of small and
medium-sized companies in the retail and service sectors
were privatized. In 2000, three power companies were
sold out, and two years later Parliament agreed to
privatize the country's large wine and tobacco
companies. Land privatization was also implemented (see
Agriculture and Fisheries).
The Moldovan economy continued to shrink throughout
the 1990s, albeit at a slower rate. At the same time,
inflation galloped and Moldova borrowed large sums
abroad to cover its deficits. The country was heavily
indebted and could not pay all energy imports. The
electricity supply was switched off periodically.
Increased exports are turning the economy upwards
Although the 2001–2009 municipal government
accelerated privatization somewhat, it was reluctant to
agree to necessary but unpopular measures to
decontaminate the debt-ridden economy. In 1998–2006,
international credit institutions such as the World Bank
and the International Monetary Fund (IMF) canceled
several loan payments. In 2010, central government debt
amounted to just over a quarter of GDP, which was about
half of that in Latvia and a quarter of the central
government's share of GDP in Iceland that year.
During the first decade of the 2000s, the economy
began to grow. In 2000–2010, GDP increased by an average
of 5 percent per year, though from a low level. An
exception was 2009, when the economy shrank by a tenth
as a result of the global economic downturn. Growth was
driven by rising exports and domestic private
consumption. But private investment remained few.
Although inflation fell, it remained high. In addition,
increased prices of Russian gas and Russian blockades
against Moldovan wine hit the economy hard. Other
challenges were high unemployment and large trade
The EU-friendly bourgeois governments that have ruled
since 2009 have aimed to bring Moldova closer to the EU
and the Union's internal market, thus reducing
dependence on Russia as a trading partner. This has
required budgetary restructuring and a more rapid
privatization process. The approach has encountered many
obstacles, not least political struggles (see Modern
History and Current Politics). But progress has been so
clear that negotiations on a free trade agreement
between the EU and Moldova started in 2012 and that the
two parties signed an association agreement two years
later. The reform process receives financial support
from the World Bank, the IMF, the EU and the USA, and
others. Russia's subsequent decision to impose import
bans on wine, meat and fruit from Moldova from 2013 and
2014 was very noticeable for the export-dependent
A setback for both the country's economy and the
reform processes came in April 2015 when it was revealed
that around a billion dollars had been squeezed out of
the country's three largest banks. It turned out that
the banks had made payments corresponding to one-sixth
of Moldova's GDP shortly before the November 2014
elections and that the money had ended up in foreign
accounts, probably belonging to high-ranking politicians
and businessmen. The central bank granted the banks a $
700 million loan and the state took control of their
operations to save them from bankruptcy, which could
have caused the entire banking system in the country to
The loans to the banks came as a heavy burden on the
central government debt - and poor molds. The population
also experienced rising inflation, a reduced value of
the currency leu and tougher loan requirements as well
as higher interest rates. Prices for gas, electricity
and district heating were raised.
Although the governor took on the debt and resigned
in September, the IMF made the decision later that month
not to start negotiations with Moldova on new loans
before investigating the causes behind the
billion-dollar theft. Only in November 2016 did the IMF
grant a three-year loan of $ 179 million. The loan terms
were that the government pushed through economic
reforms, that the business climate improved, that the
banks' operations were reformed and that efforts to
combat corruption increased.
FACTS - FINANCE
GDP per person
US $ 3 189 (2018)
US $ 11,309 million (2018)
4.0 percent (2018)
Agriculture's share of GDP
10.2 percent (2018)
Manufacturing industry's share of GDP
11.4 percent (2018)
The service sector's share of GDP
53.3 percent (2018)
4.9 percent (2019)
Government debt's share of GDP
29.7 percent (2018)
US $ 6 974 million (2017)
Assistance per person
US $ 68 (2017)
Moldavians can become Romanians
The government is reacting negatively when the EU country Romania makes it
easier for Moldovan citizens to apply for and obtain Romanian citizenship. With
Romanian citizenship, Moldaver can travel freely within the EU without a visa.
The Chi iinău government is withdrawing its decision to allow Romania to open
two new consulates in Moldova.
Transnistria stands firm on independence
A referendum in Transnistria reiterated the demand for independence from
Moldova. The voters also support the outbreak region's plans to eventually
become part of Russia.
Russian gas as a means of power
Moldova, which is dependent on gas imports from Russia, refuses to accept a
sudden doubling of the price of Russian gas. As a result, the Russian gas giant
Gazprom temporarily suspends gas supply to Moldova. The cranes are reopened when
a compromise is reached between the two countries.