European Commission Sharply Lowers Its Economic Growth Forecast for Moldova

It announced that it had revised its 2025 growth projection for Moldova down to 0.9% from the 3.8% forecasted in November, after the country’s GDP grew by only 0.1% in 2024. “Economic recovery came to a halt in 2024 due to yet another poor harvest and the resulting decline in demand for transport services. While these factors are expected to continue weighing on real GDP growth in the first half of 2025 – along with a renewed energy price crisis – growth is projected to gradually recover. Private consumption is expected to remain resilient, supported by rising real wages,” the Commission stated in its Spring 2025 Economic Forecast, according to Logos-Press. Moldova’s gross domestic product (GDP) – as an EU candidate country – is expected to grow by 2.8% next year. This will be supported by public investment backed by EU financial assistance from the new Reform and Growth Facility, the EU executive body said. However, the Commission revised its earlier 2026 growth forecast down from 4.2% to 2.8%. “The continued rise in energy prices pushed the consumer price index (CPI) up to 8.75% in March 2025. In an effort to curb inflation, the National Bank of Moldova shifted to a tighter monetary policy at the beginning of 2025, raising the base rate to 6.5% in February 2025. Inflation is projected to remain above the central bank’s target range of 5% ± 1.5% throughout 2025 but is expected to decline again by the end of the year. However, risks related to the price impact of energy imports and further food price volatility remain high,” the European Commission noted. The budget deficit in 2024 stood at 3.7%, lower than initially forecast, due to higher-than-expected revenues and underfulfilment of public investment. However, in 2025, the budget deficit is expected to increase to 5% of GDP, driven by rising public sector wages and higher current and capital expenditures, supported by additional funding from the Reform and Growth Facility. Meanwhile, public debt is projected to reach 40.9% of GDP in 2026, up from 38.2% in 2024, primarily due to the higher budget deficit linked to additional funding under the Reform and Growth Facility, the Commission explained. Previously, other institutions also revised downward their 2025 GDP growth forecasts for Moldova: the EBRD to 1.8%, the IMF to 0.6%, and the World Bank to 0.9%.