Moldova’s industrial growth accelerates to 10.8% y/y in Q2

Moldova’s industrial growth accelerates to 10.8% y/y in Q2
By bne IntelliNews August 13, 2018

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
TOTAL 8.6% 7.3% 0.7% 0.9% 3.5% 5.7% 6.4% 10.8%
Mining, quarrying 22.3% 0.2% -9.2% -15.5% -4.4% 0.9% -6.8% 9.9%
Manufacturing 10.7% 8.5% 2.3% 1.8% 4.6% 8.4% 8.7% 10.2%
Utilities -4.3% 4.4% 1.0% -0.9% -1.3% -7.2% 3.4% 16.8%
Source: BNS