Moldova’s trend Current Account deficit widens 22% y/y at end-June

Moldova’s trend Current Account deficit widens 22% y/y at end-June
By Iulian Ernst in Bucharest October 2, 2017

Moldova’s Current Account deficit in the rolling 12 months ending June increased by 22% y/y to $420mn, the central bank announced. The gap in Q2 alone widened by 131% y/y to $187mn, the highest level since Q4, 2014. Rising consumer sentiment and stronger inflows of remittances and foreign assistance widened the external deficit.

The Current Account gap in the 12-month period ending June thus reached 6.1% of the bne Intellinews estimate for the period’s GDP ($7.1bn), up from 4.6% calculated at the end of March and 4.3% at the end of 2016.

The net import of goods (trade deficit) widened by 9.4% y/y to $2.28bn in the 12 months ending June, or 32% of the period’s GDP. The trade deficit remained around $2.1bn in 2015-2016, but the increase in consumer sentiment prompted by the settlement of the political crisis and the slight improvement in the net remittances sent from Moldovans working abroad widened the trade gap through 2017. The resumption of transfers from Moldova's foreign development partners resulted in a stronger local currency with an impact on foreign trade as well.

The coverage of the trade gap (goods) by net remittances (net wages and transfers to households taken together) weakened to 61% in the 12 months ending June, from 64%-65% during 2016 and earlier in 2017. However, the net transfers from abroad to households were showing signs of improvements in July-August as well, indicating certain improvement in the coverage ratio in the second half of the year.

Related Content

Data

Dismiss