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Economy

Macroeconomic data

Moldova's economy is an open market economy. In 2011, the GDP amounted to 82 174 thousand lei in nominal value, current market prices, increasing - in real terms - by 6.4% compared to 2010. Export and import of goods and services increased respectively by 28.6% and 19.3% compared to 2010.

The results of the evolution of the national economy during the current year emphasize the cooling of economic growth. Tensions in the European countries where financial problems have arisen, directly affect the demand both externaly and internaly for Moldovan products. Respectively, it affects exports, which increase very slowly. High level of general economic uncertainty makes businesses more reluctant to resort to bank loans. Therefore, the investment activity is quite passive and industrial companies produce less, with a subsequent negative effect on transport services and domestic trade. In addition, adverse weather conditions had a negative impact on the national economy.

Gross domestic product (GDP) increased insignificantly. GDP in the first half of 2012 amounted to 39.3 billion. lei, increasing over the same period of last year by 0.8% (in comparable prices). Slowing GDP growth was due to a generally weak external demand for goods produced in Moldova and a weakening of internal demand due to final consumption. The most significant influence on GDP was from gross value added (GVA) created from internal trade (+0.6 pp) in other services (+0.4 pp) and industry (+0.2 pp). However, the degree of influence of GAV created in agriculture on the GDP was negative by 0.4 pp

Consumer prices continue to rise, but at a slower pace. In August 2012, consumer prices rose by 1.5% compared to December 2011, versus 4.8% in the same period of 2011. The increase of prices was due to generally unfavorable weather conditions and higher tariffs for public utilities (water and sewerage and electricity). During 2011, the average monthly nominal salary of an employee was 3 193.9 lei (195 Euro).

Moldovan Leu depreciated. Since the beginning of the year the exchange rate of the national currency depreciated by 6.5% in nominal terms against the U.S. dollar and 3.9% against the Euro. The main factors influencing the exchange rate changes were remittances from abroad and fluctuations of the U.S. dollar against other currencies on international currency markets, driven largely by economic issues related to growth and external debt in the United States of America and some countries of the Euro zone. The stock of exchange reserve of the National Bank of Moldova as of 30.08.2012 reached a maximum value of 2231.6 million, increasing by 10.5% from the level recorded on 26.08.2011 and 13.6% compared to the level at the end of 2011.

Lending activity is slow. M3 money supply at the end of august 2012 was about 46.1 billion. lei and increased by 14.2% compared to the end of august last year. Money market situation is characterized by a moderate growth rate of currency in circulation and deposits. However, the worsening of the internal and external economic situation and the high level of uncertainty makes the banks to be more cautious in lending on the one hand and, firms reducing their demand for loans on the other hand.

Public finances are showing signs of stabilization. In January-August 2012 the national public budget accumulated approximately 20.9 billion. Lei in revenues, up 14.5% over the same period of 2011 and 98.6% from the amount planned for this period. Almost all components show a slight acceleration of growth. Expenses totalled 22.15 billion. lei, increasing by 9.8%, respectively, and 87.7% from the amount provided. Thus, the budget deficit at the end of august 2012 was 1219.6 million lei, 681 million lower than that recorded on the same date of 2011.

State debt situation is relatively stable. Total amount of debt (internal and external), administered by the Government at the end of august 2012 constituted 20.3 billion. lei, up by 8.3% compared to the end of august 2011. Internal public debt has increased by 10.6%. However, there was a decrease of 2.4% of the external debt. This decrease was due largely to the fact that during eight months, repayments of external loans exceeded inflows. However, expressed in lei, the external state debt saw a 7.3% increase due to currency depreciation against the U.S. dollar.

Exports and imports grew modestly. Foreign trade in January-July 2012 was influenced by the external situation, particularly in countries that are major trading partners of Moldova. Internally there is a dominance of products necessary for the functioning of the economy and the population's consumption. In January-July 2012 exports rose by 2.4% and imports - by 3.2%. The negative balance of trade was 1672.5 million USD, which is 59.9 million USD higher than that recorded in the corresponding period of 2011. The coverage of imports by exports in January-July 2012 was 41.9% compared to 42.2% in January-July 2011.

Industrial sector increased slightly. Production volume manufactured by industrial enterprises of all forms of ownership in January-July 2012 showed a slight increase of 0.2% (in comparable prices) from January to July 2011. It was influenced by a decrease in production volume and distribution of electricity and heat - by 4.4%. However, there was a slight increase in production volume of the processing industry and mining industry. In July, industrial output rose by 1.2% compared to that of last year. The largest decrease was recorded in March - 4%, while industrial output in May rose by 10.6%.

Agriculture results were negative. Agricultural production in the first half of 2012 amounted to 3.7 billion in current prices. lei, lower by 2.1% (in comparable prices) to the corresponding period of last year. Reducing agricultural production was determined by the decrease in crop production by 15.4%. Livestock production accounted to 80.5% of total agricultural production and grew only by 0.6%.

Investment activity is passive. In January-June, 2012 the volume of investments in long-term tangible assets totaled about 5 billion lei (current prices), with a decrease of 0.6% (in comparable prices) over the same period of 2011 (the current quarter decrease was 4.6%).

Volume of transport services has been declining. Rrailway, road, river and air transport enterprises transported 5.8 million tons of goods in January-August 2012 or 2.9% less than the volume carried in January-August 2011, while in the first quarter of 2012 the decrease was 28.9%. The main causes contributing to this decline are the reduced volume of goods transported by transit, reducing export of oilseeds, grains, metals, and stagnation of construction. Also the volume of goods transported by road transport increased by 10.2% compared to the same period of 2011.

The volume of retail trade and services provided to the population increased moderately. The turnover in retail trade rose by 1.4% (in comparable prices) from January to July 2011, and the turnover of the services provided to the population by 4.7%.

The situation in the social sphere is improving. The monthly average gross wage of an employee from the national economy in July 2012 constituted 3574.9 lei and increased by 9.6% compared to July 2011 in nominal terms and in real terms - by 5.4%. Labor offices in January-August 2012 registered about 33,200 unemployed, by 27.0% less than their number registered in the same period of last year. Subsistence minimum in the second quarter of 2012 averaged 1455.1 lei per person, decreasing in the first quarter of 2011 by 3.2%. Monthly disposable income of the population in the second quarter of 2012 has averaged 1523.1 lei per person, an increase over the second quarter of 2011 by 6.0% in nominal terms and by 1.9% in real terms.