Moldova’s industrial production index accelerated to 10.8% y/y in Q2 from 6.4% y/y in Q1. The output in the past 12 months ending June increased by 7.1% y/y, reaching the highest level in more than three years.
The growth is driven by labour-intensive industries where foreign companies have opened production units. Such developments, typical of the first stage of the transition from a centralised economy, create workplaces but limited value added — still enough to push up the country's overall economic growth.
At 3%-5% GDP growth, Moldova needs decades to close the gap with even the least developed European Union countries. Moldova's GDP per capita at PPP was calculated at $5,600 in 2017 versus $8,700 in Ukraine, $22,000 in Bulgaria and $24,000 in Romania.
The manufacturing sector advanced below average in Q2, yet at a robust rate of 10.2% y/y. In the rolling 12-month period, however, it performed above average (+8.5% y/y) and particular industries such as electrical equipment production posted outstanding growth rates (+49% y/y).
Other labour intensive industries advanced as well as regional producers face workforce scarcity (and higher wages) in Romania: textile production increased by 13.7% y/y in the rolling 12-month period and 16% y/y in each of the first two quarters of 2018. Garment production increased as well by some 11% y/y in each of the two quarters and 7.6% y/y in the 12-month period.
Food production is also increasingly capitalising on the export opportunities generated by the free trade agreement with the European Union: industrial production in the food industry (fruit and vegetable processing, to a large extent) increased by 16%-17% y/y in each of this year’s first two quarters and by 13.7% y/y in the rolling 12 months.
|Industrial Production y/y||2013||2014||2015||2016||2017||Q4-17||Q1 18||Q2 18|