Moldova’s trade gap widens by 24% y/y to 31% of GDP

Moldova’s trade gap widens by 24% y/y to 31% of GDP
By Iulian Ernst in Bucharest February 20, 2022

Moldova’s foreign trade gap increased by 24% y/y and by25% compared to 2019, to €3.42bn in 2021, the statistics bureau BNS announced. The trade gap-to-GDP ratio also leapt up, to 31.3% in 2021 from 24.6% in 2020 and 25.6% in 2019, the last year before the crisis.

The subdued economic activity in 2020 resulted in a smaller trade deficit, but the gap returned to higher levels once the economy returned to normal. Higher oil and gas prices contributed to the deterioration of Moldova’s external balance. The country is fully dependent on the import of oil. 

In 2021, Moldova’s exports rose by 27.5% y/y in US dollars, as reported by the BNS (or by 23.6% y/y in euros according to bne IntelliNews calculations). 

Romania remained the biggest market for Moldova’s exporters by far ($833.5mn, 26.5% of the total), and Turkey ($314.0mn, 10% of the total) surpassed Russia as the second-largest market after soaring by 1.8 times y/y. Russia remained an important market for Moldova, nevertheless, with a share of 8.8% ($276.0mn). Germany is becoming an increasingly important market and may surpass Russia if more foreign investors develop production facilities in Moldova. In 2021, Moldova’s exports to Germany rose by 8.8% y/y to $245.5mn.  

At the same time, markets that have been not that large for Moldova are increasing fast: exports to Spain, Greece and Hungary have more than doubled and exceed $10mn each in 2021.

Cereal exports made an important contribution to the overall rise of Moldova’s exports in 2021, as the value of the cereals exported last year nearly tripled in y/y terms to $389mn. Exports of oilseeds also increased by 15% y/y to $256mn. Exports of parts of electric household goods — the single largest export item — increased by only 10% y/y, but given their size ($522mn in 2021) this resulted in a significant 1.9pp contribution to the growth of exports last year.

Imports to Moldova rose by 32.5% y/y in 2021, in US dollars — or by 28.7% y/y in euros — to $6.06bn. Out of this, $1.05bn were exports from Russia, which increased 1.7 times in line with the price of the natural gas. Natural gas imports soared 2.2 times (value terms) to $417mn. The import of petroleum products (typically not from Russia, but Romania, Bulgaria and Ukraine) surged 1.7 times y/y to $629mn.

Notably, Moldova runs a significant trade surplus with Switzerland (+$81.4mn), Lebanon (+$24.6mn), Georgia (+$15.4mn) and Cyprus (+$12.5mn) and a small surplus with other countries including Romania (+3.5mn).