In 2020, Moldova went through the most severe recession in the last twenty years, this year was marked by two major crises, the covid-19 pandemic and the drought, which further deepened the negative effects of the pandemic. The agricultural sector saw a decrease of 27.1% compared to 2019. As a result of the pandemic and drought, the total GDP fell by 7% in 2020. Only the construction sector showed positive growth in 2020.
Public finances remain under significant pressure, with the budget deficit ranging up to 7% of GDP. Relatively high economic growth is expected in 2021, assuming a favorable agricultural year, revival of domestic consumption and foreign trade. The main economic risks in 2021 remain the development of the epidemiological situation, continued political instability and the unfinished reform of the judiciary.
Government measures to mitigate the effects of restrictions and support the economy have been weak and insufficient, with only less than 6% of businesses reporting that they have received or expect government support. The amount of government support in 2020 is estimated at approximately 1% of GDP, this support should increase in 2021. The government adopted measures aimed at supporting the sectors most affected by the pandemic and drought.
The package of measures includes, for example, a change in the VAT regime in agriculture, support for job creation, an increase in the salaries of medical personnel, etc. Given the growing financing needs associated with the growing burden of wages and social transfers, access to external financing, which amounts to hundreds of millions, remains essential for Moldova.EUR is provided by the EU, World Bank, EIB and EBRD and other institutions.
Post-COVID-19 opportunities for foreign exporters
Transport industry and infrastructure
The development, diversification and consolidation of the transport system and infrastructure are planned, expenses are to be financed from the state budget and by attracting foreign investments. An extensive national road rehabilitation program is underway with the support of international financial institutions, especially the EIB and the EBRD. Projects focused on the restructuring of Moldovan railways are being prepared, and in a situation where the Moldovan State Railways are in serious trouble, part of the new concept is their transformation into a joint-stock company.
In the area of intelligent transport systems, the State Road Administration has started the implementation of some intelligent transport system technologies in its road network, opportunities will follow on the national road network, in Chisinau and other cities. Tenders have already been announced in Chisinau for a pilot study of the possibility of introducing a parking management system and the development of schemes for the organization of traffic.
In order to increase energy efficiency and security, Moldova is trying to attract investors. The aim is to support the implementation of joint investment projects to secure energy and natural gas resources. Special attention will be paid to investments in equipment for the production of heat, electricity and cogeneration units and to the provision of electricity transmission and distribution networks. Interest is also growing in innovative and alternative energy projects and renewable energy sources. Thanks to the implementation of pilot projects, the demand for increasing the energy efficiency of buildings is increasing.
There is also a long-term interest in gas boilers for heating, in technologies for the use of biomass and in equipment for the processing of biogas, especially from waste produced on farms in animal production. Recently, there has been a growing interest in the energy use of winemaking waste.
Water management and waste industry
According to allcountrylist, the implementation of the Water Supply and Hygiene Strategy for the period 2011-2028, which defines the necessity of changes in the political, institutional and legal framework and the critical state of the technical infrastructure, is still relevant. unsatisfactory technical condition of the system of sewage treatment plants, sewage and water distribution systems. There is an increase in the volume of investments in the construction of water supply and sewerage systems.
The opportunity for Czech companies lies in the persistent need to improve water supplies and wastewater treatment systems. Preparation for the implementation of the “Solid Waste Moldova” project continues. The loan agreement between the EIB and the Ministry of Finance of Moldova was already signed in 2019, in 2020 the update of the feasibility studies was started and the tenders for solving the solid waste situation are expected.
Agricultural and food industry
The sector still occupies a very important place in the economy, both in terms of the share in GDP creation and in terms of the share of the economically active population working in the sector, which amounts to 32.3%. In the field of plant production, the development of irrigation infrastructure, the expansion of the area of greenhouses and the development of post-harvest infrastructure are needed. Equipment and technology are required to store, process, package and transport fresh produce.
The demand for organic products and organic farming is growing. Other opportunities include services in the area of product quality and safety in winemaking (equipment, vineyard planting and expansion into tourism). In the field of animal production, there is a great need for investment in order to achieve the standards resulting from the DCFTA and thus obtain approval for the export of animal production to EU countries.