Business Profile
Economy
Moldova’s economy is dominated by agriculture, food processing and related industries which account for over half of total output. The land is very fertile: some 85 per cent is cultivated. The republic was the largest wine-growing region in the former Soviet Union and this is still a major source of revenue. It also grows fruit, vegetables, tobacco and grain, and produces dairy and meat products in large quantities. Other than food and drink processing, Moldova’s industrial sector is dominated by metals and machinery, textiles and footwear. The once thriving electronics industry has declined due to the dissolution and/or contraction of its major clients in the Russian space and defence sector. Under the Soviet system of economic planning, Moldova exported much of its output to other Soviet republics in exchange for raw materials and fuel products. The demise of the Soviet system triggered a major collapse which saw Moldovan economic output decline by 15 per cent annually during the early 1990s. This catastrophic decline has been arrested but there are few signs of economic growth, and Moldova is now one of the poorest countries in an already impoverished region. In 1992, Moldova joined the IMF, World Bank and the European Bank for Reconstruction and Development (EBRD) as a ‘Country of Operation’. After an uncertain start, a reform programme got under way in Moldova and by 1999 much of the economy had been privatised and deregulated. However, the IMF and World Bank then cut off financial support when the government refused to sell off the key tobacco and wine industries. Following some shifts in policy, the government has since been able to secure funding from the EBRD and occasional small packages from the IMF and World Bank. But relations with the latter pair are still difficult. At the beginning of 2003, the government announced its intention to liberalise the economy further.
The national currency, the Leu, introduced in November 1993, has been reasonably stable apart from the period immediately after the 1998 Russian financial crisis. Russia remains Moldova’s largest trading partner, followed by the Belarus, Romania, Ukraine and Germany. In May 2001, Moldova joined the World Trade Organization. Moldova eventually hopes to join the European Union. That aspiration depends on the results of the 2004 expansion and Moldova’s own economic performance.
Commercial Information
The following organisation can offer advice: Chamber of Commerce and Industry of the Republic of Moldova, 151 Stefan cel Mare st., Chisinau, MD 2004 (tel: (22) 221 552; fax: (22) 234 425; e-mail: camera@chamber.md; website: www.chamber.md).
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