Can Economic Decline Derail EU Accession?

The Moldovan economy shows no signs of recovery, registering minimal “low-quality” growth alongside a series of deepening structural problems – which, it appears, are becoming insurmountable for the current government

Vladimir ROTARI, RTA: Two days ago, the European Union opened the first accession negotiation cluster for Moldova, focused on fundamental values. This marks another long-anticipated milestone on the country’s path toward European integration. What lies ahead is now a long and demanding process of aligning our republic with European standards. Despite Moldova having a number of advantages that could allow it to expect relatively rapid progress in the negotiations, it also faces significant disadvantages. One of them is the state of the national economy. For a country to successfully undergo European transformation, it needs a stable economic base, yet precisely in this area increasingly visible difficulties are emerging. Official statistics for the first quarter of 2026 show GDP growth of only 0.4%. Moreover, even this modest growth is considered by economists to be of a “low-quality” nature, as it is driven solely by an increase in net taxes and a low base effect, while gross value added across all sectors of the economy has actually declined. Another negative signal is the lack of sufficient investment activity. Without investment in production, technology, and infrastructure, a meaningful economic breakthrough is impossible. It is also impossible to ignore declines in certain sectors – for example, in construction and real estate operations. A particularly telling example is the downturn in the IT sector – a flagship achievement of the authorities that is often presented as a model for others. One may recall Radu Marian’s famous statement that it is better to export IT services than apples. However, even this previously steadily growing sector, which already accounts for a significant share of the country’s GDP, recorded a decline of more than 8%, along with a number of negative trends, including a slowdown in hiring and a reduction in overall employment levels. One of the most telling indicators of the health of an economy is foreign trade. The picture is far from encouraging. In January-April of this year, Moldova’s goods exports increased to 1.118 billion euros, however imports over the same period were more than three times higher. The enormous trade deficit continues to exert pressure on the entire economic system. It is also important that the export structure remains narrow. The main growth is driven by domestically produced goods, primarily agricultural products and certain commodity groups, while re-export activity is declining. In addition, the European Union’s status as Moldova’s main trading partner has strengthened further, and it should not be assumed that this is an unambiguously positive development. Dependence on a single market does not bode well in the long term, given the well-known vulnerabilities of such an economic position. This also means that the government’s previously stated efforts to diversify export destinations have so far failed to produce tangible results. Overall, the core problem remains unchanged – not only is Moldova failing to move away from its current unhealthy economic model, but it is becoming increasingly entrenched within it. According to the Court of Accounts, the state is borrowing more and more, while the bulk of externally attracted funds is being used to cover current budget expenditures. Investment funds are being absorbed at a low level. Many projects progress slowly, and a portion of the allocated funds remains unused. By the end of 2025, the total public sector debt had reached 138.5 billion lei, increasing by almost 10% over the year. The debt-to-GDP ratio rose to 39.2%. From the perspective of the European threshold of 60% of GDP, the figure does not appear critical, but what matters more is the speed at which we are accumulating debt: it is enough to note that it has almost doubled over the past five years. Auditors note both Moldova’s growing dependence on external financing and the detrimental pattern of its use. Thus, out of 12.2 billion lei in external loans attracted by the state in 2025, nearly 9.3 billion – or 76% – were directed toward supporting the budget, effectively being “consumed” in current expenditures. This proportion is worsening year by year. If this trend continues, fewer and fewer resources will remain for development investment, while loans and borrowing will have to be taken more frequently and in larger volumes. Such a trajectory can lead to nothing other than a catastrophic outcome. In the current conditions, the authorities are attempting to consolidate resources by increasing the collection of various taxes and fees from the population. It is no coincidence that Igor Grosu announced “harsh solutions in tax policy” at the PAS congress. Some measures are already known: for example, an increase in VAT and the introduction of fees on parcels from foreign online marketplaces. There are even plans to tax wedding and holiday gifts, which has become the subject of numerous jokes on social media, although the situation is in fact far from amusing. Can the negative economic trend be reversed by shifting the burden onto the shoulders of the population? In theory, collecting more money from citizens and investing it effectively in development projects could allow the economy to push off from the bottom. In practice, however, as we understand, the outcome is likely to be the exact opposite. If the tax burden grows faster than the incomes of businesses and households – which are, moreover, continuing to decline – this will begin to suppress both consumption and investment, as well as the willingness of many to operate in the formal economy. In a fragile economy like ours, fiscal measures quickly turn into a mechanism for extracting resources from a system that is already operating at its limits. In the short term, this may stabilize certain budget indicators, but in the long run – it is unlikely to do so. It is still not entirely clear what the current authorities are relying on in the long term. The plan, as it seems, consists of little more than somehow making it to EU membership and then shifting all of the country’s economic problems onto Brussels. However, it should be noted that, according to the Copenhagen criteria, a potential candidate for accession must have a strong market economy with adequate indicators of economic growth, inflation, budget deficit, public debt, investment levels, and so on. If, by the time the political part of the negotiations is concluded – which is likely to take considerable time – we arrive with a virtually destroyed and non-functional economy, how will this affect the willingness of EU member states to accept such a country into their ranks? The question is, evidently, rhetorical.