Economist on the Fuel Crisis: Moldova Faces a 5% Recession and Economic Collapse

A rise in global oil prices could deal a serious blow to Moldova’s economy, warns Adrian Lupusor, director of Expert-Grup. Econometric analysis shows that every 10% rise in oil prices reduces economic growth by approximately one percentage point, reports bani.md. According to the expert, the Moldovan economy is more vulnerable than those of other countries in the region due to its heavy reliance on fuel imports. In a scenario where oil reaches $120-140 per barrel, the country’s GDP could contract by up to 10 percentage points against a backdrop of rising import costs, increased production costs and higher consumer prices. In such a situation, Moldova could face a recession of around -5% in 2026, with the negative consequences potentially extending into 2027. Additional pressure is exerted by the planned budget deficit of around 6% of GDP, security risks in the region and instability in the investment environment. Lupusor emphasizes the need to maintain a prudent macro-financial policy, including reducing the budget deficit to 1-2% of GDP, in order to build up reserves for action during a crisis. He also draws attention to the risks of excessive household debt, including schemes such as “First Home”. At the same time, the expert believes that the National Bank of Moldova should not tighten monetary policy too sharply, as inflationary pressure is driven by costs rather than demand, and the economic slowdown itself may reduce inflation. In his view, the authorities should move away from excessive reliance on tax breaks and adopt clear economic measures aimed at increasing value added and strengthening the long-term sustainability of the economy.