1 April 2022 – The war in Ukraine and Russia’s economic sanctions are hitting Moldova’s economy. First, exports to Russia could fall by $190 million in 2022, which could affect GDP by 1.6%. Apple exports would account for the largest share of the impact.

This is according to the study “Economic implications of the war in Ukraine and sanctions against Russia on Moldova” conducted by the German Economic Team and presented at the Working Group for the Coordination of Economic Solutions to the Crisis.

The same research also shows that remittances from Russia are expected to fall by USD 129 million, or 50%, or 1.0% of GDP in 2022. German experts also estimated the risk of disruption of gas supplies from Russia.

Attending the meeting of the Working Group for the Coordination of Anti-Crisis Economic Solutions, Economy Minister Sergiu Gaibu stressed that the data presented by the German experts suggest that we are not in a position to expect that things will return to what we had before the crisis in Ukraine. We need to act in the context of a new economic order in Europe. We need to think of new projects, strategies and concepts to be able to face the challenges, said Sergiu Gaibu.

Some solutions are being worked out, experts from the Economic Council Secretariat told the meeting. A study on the consequences of the war in Ukraine on the Moldovan economy has been prepared with the support of the USAID and Swedish Government-funded Future Technologies Project, and resilience measures have been presented. More details were presented on the impacts, including by economic sectors, generated by exports and imports, increased prices of energy resources, disruption of value chains, reorientation of transport corridors, etc.

To lessen the economic shock, experts propose redirecting exports to new markets and domestic consumption, cushioning the rise in energy and fertiliser prices, replacing imports with local production, especially for dairy products and poultry. The experts also propose diversifying instruments to stimulate SMEs and attracting investment in the smart economy, i.e. IT.

Attending the event, State Secretary of the Ministry of Agriculture and Food Industry, Anatolie Fala, said that his institution and economic agents were working on viable and rapid solutions that would help businesses to reorient their activities, which had already been affected by the pandemic, to withstand a new economic shock.

Experts say the state will in some cases have to resort to swift regulatory changes to support the business community. And in other cases, financial support will be needed. In addition, a need for access to finance for investment in the economy has been identified.

These and other anti-crisis measures are to be discussed at technical level, in detail, with public authorities, Working Group members and the business community. When measures agreed by all stakeholders are agreed, they will be presented to the Moldovan Emergency Commission and the Prime Minister for consideration.

The Secretariat of the Economic Council to the Prime Minister is supported by the European Bank for Reconstruction and Development, funded by the UK Government’s Good Governance Fund.