Moldova's research institute launches optimistic economic forecast for 2015

Moldova's National Economic Researches Institute (INCE) on Thursday predicted a possible 0.6-percent economic growth for the current year, a forecast more optimistic than the government and main international institutions, which estimate an economic downturn in the former soviet republic.

Yet, the researchers of the institute stressed that the predicted growth is based on "an adequate management of the imminent risks." Otherwise, "the national economy might enter a recession this year, with a two-percent contraction of the Gross Domestic Product in real terms against 2014."

Moldova's economy faced a difficult situation in 2014 in light of numerous trade embargoes imposed on Moldovan goods by the Russian Federation and uncertainty related to the situation in Ukraine.

In addition to these, serious problems in Moldova's financial sector posed a risk to stable economic development.

Shortcomings in the banking sector came to the fore at the end of 2014 with two consecutive decisions by the central bank to place three major commercial banks under special administration, representing about 30 percent of total banking assets.

The above-mentioned risks will persist in the current year too, while at the same time there are also the local elections, as well as enhancement of the inflationist pressures, INCE director Alexandru Stratan was quoted as saying by official Moldpres news agency.

The Economics Ministry and the International Monetary Fund forecast a decrease of the national economy by one percent in 2015, while the World Bank anticipates a two-percent recession of the Moldovan economy, as a result of the regional crisis, diminution of external demand, cut in money transfers and finances.

Moldova, a tiny country of 3.5 million people sandwiched between Romania and Ukraine, is trying to reorient its economy towards the west after it signed the Association Agreement with the European Union (EU) last June and in 2014, the EU accounted for over 50 percent of the country's exports.