Moldova reports strong industrial production growth in H2 2017

Moldova reports strong industrial production growth in H2 2017
By bne IntelliNews February 19, 2018

The industrial production index increased by 3.5% y/y in 2017 on average, according to data from Moldova’s statistics bureau BNS. However, the growth accelerated to 5.7% in Q4 when the food industry and the production of textiles gained momentum. 

Investments in car parts production (electric equipment) in past years at the expense of, for instance, tobacco processing is visibly skewing the structure of the index toward secondary industries, while some industries based on agriculture (fruit and vegetable processing, production of spirits) remain important.

The overall industrial growth rate was in line with the government’s full-year projection (6%) only in H2, when it advanced by 6% y/y and Q4 (5.7% y/y). During the first two quarters of the year, the growth was disappointing (1.8% y.y in Q1) or even negative (-0.5% y/y in Q2).

For 2018, the government has projected 5% industrial growth. Industry accounts for some 15% of Moldova’s economy (GDP).

The utilities sector (electricity and natural gas supply mainly) performed below the average during the past two years (actually the volume of activity shrank in each of the two years), while the core manufacturing sector performed significantly above the average. Thus, the manufacturing industries expanded their output on average by 4.6% y/y in 2017, which is closer to the 6% industrial growth envisaged by the government. In Q4, the growth rate accelerated to 8.4% as production in the food industry soared by 14.6% y/y (+82% y/y for fruit and vegetables processing) and the production of textiles accelerated by 27% y/y.

Electrical equipment production strengthened its performance to 67% y/y, from 59% y/y in Q3 and with an average 38% y/y growth in full year became the second highest growing industry after fruit and vegetables processing (+43% y/y). Notably, tobacco production further lost momentum (-33% y/y in 2017) marking the fifth year in a row of negative performances. The tobacco processing industry has stretched by six times since 2012 while electrical equipment production has nearly tripled.

Industrial Production y/y 2013 2014 2015 2016 2017 Q1-17 Q2-17 Q3-17 Q4-17
TOTAL 8.6% 7.3% 0.7% 0.9% 3.5% 1.8% -0.5% 6.0% 5.7%
Mining, quarrying 22.3% 0.2% -9.2% -15.5% -4.4% -17.1% 9.2% -13.6% 0.9%
Manufacturing 10.7% 8.5% 2.3% 1.8% 4.6% 1.3% 0.3% 6.8% 8.4%
Utilities -4.3% 4.4% 1.0% -0.9% -1.3% 3.6% -10.2% 7.0% -7.2%
Source: BNS