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FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT OCTOBER 2005
MOLDOVAN STOCK EXCHANGE
ECONOMIC AND POLITICAL DEVELOPMENTS
Politic and Economic Environment:
Food processing comprises a significant
portion of light industry with vegetable
preservation, sugar refining, cigarette
production and winemaking as major
activities. Endowed with virtually no
indigenous hydrocarbons and small reserves
of coal, Moldova is highly dependent on
neighboring Russia, Romania and the
Ukraine for energy and a significant part of
the country's external indebtedness is to
Russia's Gasprom for natural gas.
The Moldovan economy was in decline
throughout the 1990s, sometimes
precipitously such as in 1994 when drought
destroyed virtually the entire grape harvest
causing GDP to decline 31%. The Russian
financial crisis of 1998 hit Moldova
particularly hard as exports withered, the lei
depreciated nearly 50% and inflation, which
had moderated in recent years, increased as
world energy prices escalated sharply from
1999. The economy contracted by 6.5% in
1998 and 3.4% in 1999. Despite both a
severe drought and destructive freezing
conditions near the end of the year which
ruined crops and caused widespread
damage to power and telecommunications
infrastructure, Moldova reported real GDP
growth of 2% for 2000.
PAGE 106
The eastern European nation's parliament
elected Communist Party leader Vladimir
Voronin as the new president on April 4,
2001. The result was widely expected after
Moldova's communists swept to power in
general elections in February. Voronin, 59, a
former baker and police general, captured
71 of the 89 votes cast by members of
parliament. "I call on all the parties in
parliament and outside to reconcile and take
the country out of the crisis, " Voronin said
after the vote. He said his priority was to
reach a settlement with eastern Moldova's
Slavic separatists, who broke away in 1992
after a war that claimed 1,500 lives. Voronin
also pledged to continue relations with the
World Bank and the International Monetary
Fund. He promised to have good relations
with neighboring Ukraine and Romania.
Economic Performance:
After GDP growth of 2.1% for 2000, a sharp
recovery ensued. GDP growth registered
6.1% in 2001 and around 7% in 2002, due to
better weather and the improving economy
in Russia. The National Bank of Moldova
tightened monetary policy and brought
inflation down to single digit rates in
mid-2002.
Key Information Contacts
MSE President Dr. Corneliu Dodu dodu@infomarket.md
Listing, Marketing and Quotation Department rimma@moldse.md, denis@moldse.md
National Securities Commission of Moldova www.cnvm.md
Department of Privatization www.privatization.md
ECONOMIC RATIOS
Domestic
savings
Moldova
Lower-middle-income group
Trade
Indebtedness
Investment
GROWTH OF INVESTMENT AND GDP
(%)
20
10
0
-10
-20
97
GDI GDP
In 2000, export growth as measured in US
dollars was virtually zero as further lei
depreciation and falling export commodity
prices affected the value of exports, but
imports revived and the current account
expanded again to US$ 135 million,
equivalent to more than 10% of GDP.
Despite rapid growth in 2001, exports
recovered as the currency stabilized and
Russia recovered, causing the current
account deficit to fall to 7.4% GDP, about
US$ 119 million. The typical pattern in
Moldova's current account in recent years
has been a significant deficit in merchandise
trade and a somewhat smaller deficit on
trade in international services, combined with
a steady inflow of remittances from
Moldovans working outside the country and
a paradoxical surplus on net factor income
payments (which is not expected of a
country with an external debt load equivalent
to 90% of GDP). 1
1 Economic and Political Overview, County Watch
Incorporated, 2005
98 99 00 01 02 03
* World Bank reports