Moldova’s Economy in 2025: Growth Stalls, Problems Deepen

This year, an economic breakthrough is unlikely, with major international financial institutions offering rather discouraging forecasts for Moldova.

One Third of the Population Lives Below the Poverty Line This month, the National Bureau of Statistics published noteworthy data that caught the attention of several experts and opposition media outlets, but was largely ignored by pro-government sources. The data reveals a 10% rise in poverty since PAS took office. As a result, every third Moldovan now lives in poverty, with the rate of extreme poverty having surged by 1.5 times. The main causes of this phenomenon are relatively well known. The specific political course of the current leadership, combined with objectively poor management of both the economy as a whole and the internal and external crises affecting it, has led to a sharp rise in inflation (at one point the highest in Europe) and utility tariffs. At the same time, unlike expenses, household incomes are barely increasing. Economists highlight an interesting fact: over the past twenty years, real wage growth has fallen more than tenfold, to a symbolic one and a half percent per year. The poverty spiral is also being fueled by the increasing emigration of the working-age population, which, according to expert Veaceslav Ionita, is leading to social segregation, when wealthier and/or younger villagers move to cities or abroad, and only the poorest and elderly remain. This further worsens conditions in peripheral areas and turns rural regions, in particular, into enclaves of extreme poverty. Zero Economic Growth Poverty is a direct consequence of the republic’s weak economy, which is unable to provide an adequate standard of living for its citizens. A year ago, former Minister of Economy Dumitru Alaiba stated that “Moldova cannot afford to continue with economic growth of just 2–3%” and that ‘initiatives and policies’ were needed to reach a 10% growth rate. In reality, however, the domestic economy grew by less than one percent over the past year: 0.7% in 2023 and a mere 0.1% in 2024. Each time the authorities predict that progress is just around the corner. This year, the relevant ministry is counting on 2% growth (which, notably, is already lower than the forecast used in the adoption of the state budget, which anticipated a 3% GDP increase). The remaining forecasts for the next three years have also been revised downward: 2.4% in 2026, 2.8% in 2027, and 3% in 2028. In other words, Alaiba’s much-desired 10% growth is nowhere in sight. The ministry of economy believes that this year’s modest positive growth will be supported by several favorable factors, including “the recovery of the agricultural sector, positive dynamics in export-oriented services, the resumption of private investments, and Moldova’s Economic Growth Plan.” At the very least, the hopes for increased investment seem overly optimistic. As for agriculture, for instance, just recently the Moldova Fruct Association reported damages of nearly one billion lei in the horticulture and table grape sectors alone, caused by April frosts. Importantly, key international financial institutions are also quite pessimistic about Moldova’s economic outlook this year. In its latest report, the International Monetary Fund stated that Moldova’s economy will grow by only 0.6%, a sharp downgrade compared to the October forecast and the lowest rate among developing countries in the region, including war-torn Ukraine. According to the IMF’s new data, some acceleration is expected only in 2026, while the 5% growth target announced by the government will not be reached until 2030. The World Bank has also revised its 2025 growth forecast for Moldova downward – to just 0.9%, a reduction of four times. Are the Industry’s Problems Incurable? Frankly speaking, the IMF and World Bank assessments mentioned above should come as no surprise to anyone. Our country has less and less potential left to push off from the bottom and begin catching up quickly with its neighbors, let alone the developed countries of Western and Central Europe. The demographic situation is absolutely catastrophic, as I have already written earlier this year. It has a direct and severe impact on the labor market, whose trends are far from encouraging. According to Viorel Ionita, nearly 40% of our workforce is currently abroad, and only one in five active Moldovans is actually employed in the real sector of the economy – the one that generates added value through production, services, or exports. In numbers, that’s about 470,000 people. In 2024, for the first time, the number of people exiting the working-age population exceeded the number of children. Over the past decade alone, the number of employed people in the country has decreased by half a million. As a result, whereas in 1990 there were three workers for every pensioner, today the ratio is nearly one to one. This, in turn, puts enormous pressure on the pension system, condemning it to a constant funding deficit and meager payouts. According to Ionita, high migration and low birth rates will lead to a severe labor force crisis in the coming years. It can hardly be said that the authorities are particularly concerned about the dire state of the economy. We see no decisive ‘initiatives and policies’ that Alaiba spoke of. It gives the impression that the country’s leadership prefers to go with the flow, taking advantage of the fact that many problems can be concealed thanks to unprecedented levels of Western funding. Only the billions of euros from the EU and other partners (recently supplemented by another €1.9 billion package from Brussels) still create the illusion of relative stability, though not everywhere, as seen in the situation with the state railway company, where employees haven’t been paid for months. This external support is the only thing preventing a collapse and the resulting economic shock for the population. The problem, however, is that this unprecedented level of external financial support is essentially being wasted, since the authorities use it to cover up their own governance failures, and is hardly being directed toward the development of the real sector, which could actually stimulate meaningful economic growth. Instead of enriching our production portfolio, we are merely accumulating a debt portfolio, and ‘carrying’ it – that is, servicing our debts by spending a significant and ever-growing share of the state budget – will be more and more difficult with each passing year, until the moment comes when it simply becomes impossible to increase at all.