Moldova’s GDP growth slows to 2.5% in Q2

Moldova’s GDP growth slows to 2.5% in Q2
By bne IntelliNews September 18, 2017

Moldova’s GDP increased by 2.5% y/y in comparable prices in Q2, to MDL34.25bn (€1.66bn) the statistics bureau announced on September 15. 

Gross fixed capital formation kept rising at a robust rate (6.3% y/y), but exports lost momentum, growing at a slower rate than imports in Q2.

The GDP in the past four quarters hit €6.52bn, up from €6.1bn in 2016 and €5.8bn in 2015.

In H1, GDP increased by real 2.8% y/y on average, after the robust 3.1% y/y increase in Q1.

The dynamics of taxes and subsidies (10% up y/y in real terms and 17.3% of GDP in Q2) complicates the analysis of individual sectors on the production side, as the government apparently extended less money in subsidies in Q2 amid a steady improvement in tax revenues.

The Gross Value Added increased by only 1.1% y/y in Q2, marking a sharp slowdown from 3.7% y/y (unrevised data) in Q1. Net taxes and subsidies, however, ballooned by 10% y/y (out of which net taxes increased by real 6.0% y/y) to MDL5.9bn.

Manufacturing (14.9% of GDP in Q2) generated the same value added as last year, in comparable prices, after a 1.2% y/y expansion in Q1. The sector of services to households (21.8% of GDP) generated 4.7% y/y more value added, contributing 1pp to the GDP growth. This was, however, a visible decline from the 10.5% y/y expansion in Q1 that contributed 2pp to the more significant GDP growth (3.1% y/y) in Q1. The weak production in agriculture (6.2% of GDP) resulted in 6.9% lower value added in Q1 compared to last year and a negative 0.5pp impact on the GDP growth.

On the utilisation side, final consumption increased by a real 3.2% y/y in Q2, only marginally slower than the 3.4% y/y increase in Q1, resulting in an average 3.3% y/y growth. On the upside, the gross fixed capital formation increased by real 6.3% y/y in Q2 (4.8% y/y in H1). Exports lost momentum and increased by only 7.3% y/y in Q2 after the 23% y/y expansion in Q1. Imports, on the other hand, also moderated to an 11% y/y growth from 17% y/y in Q1.