MOLDOVA
Economy
Economy
Cities in MOLDOVA
| Chisinau |
Economy
General
Moldova has a good climate and good soil for agriculture but, on the other hand, few natural resources. Because of this, the economy was largely dependent on agriculture, including fruit, vegetables, wine and tobacco. Oil, coal and natural gas all had to be imported, mainly from Russia. Energy shortages were the cause of a sharp decline in agricultural production after the collapse of the Soviet Union in 1991. As part of a comprehensive economic reform programme, Moldova introduced a convertible currency, froze all prices, stopped subsidies to state-owned enterprises, promoted the privatisation of agricultural land and loosened interest rates. However, internal and regional economic and political problems still had a major impact on the economic situation. The economic crisis in Russia in 1998, Moldova's main trading partner, caused GDP to drop by 8.6%. In 1999, GDP fell again, this time by 4.4%, the fifth drop in seven years; in particular, exports fell and energy supplies were very erratic. In 2017, GDP recovered and economic growth was 4.5%. External debt amounted to 31.5% of GNP in the year 2017. GNP was $6,400 per capita.
Agriculture and livestock
In the Soviet Union, Moldova was the sixth largest agricultural country with champagne and wine as the main export products. The weather has a major impact on the agricultural sector, often resulting in poor harvests. In 2013, the agricultural sector accounted for 13.8% of GDP and employed 26.4% of the workforce. Moldova is a major producer of tomatoes, apples, grapes and grapefruits, and its many orchards also produce plums, apricots, cherries and peaches. Fruit production is concentrated in the north and centre of the country and on the banks of the Dniester River. Tobacco is also important (30,000 employees), as well as sugar beet (80,000 ha, 30,000 employees and ten factories) and sunflowers for sunflower oil. Wheat and especially maize are produced for the local market, export and animal feed. About half of the products produced in the Moldovan agricultural sector are sold to the former Soviet republics, especially Russia, Ukraine and Belarus. The meat sector accounts for 50% of total agricultural production. Half of the production is pork and the rest is beef, chicken and lamb.
Industry and trade
In 2017, industry provided 20.3% of GDP and 12% of the workforce worked in this sector. Moldova's main industrial products are motorbikes and related items, including tractors and car parts. There is also some chemical industry (plastics, synthetic fibres, paints and varnishes) and construction industry (cement, concrete). The consumer goods industry has experienced major problems since the early 1990s. The supply of cheap fuel and raw materials almost completely stopped after the collapse of the Soviet Union and the hostilities in Transnistria. Together with high inflation, the prices of goods rose, sometimes even doubling.
Textile industry (50%) and food industry (40%) are important. Heavy industry dates back almost entirely to the Soviet period. It accounts for 16% of total industrial production, especially mechanical engineering.
Also of great importance is the production of wine, tobacco and canned foodstuffs (meat products, dairy products). The most important agricultural export product is wine. Moldavia uses more than 150,000 ha for viniculture. Of increasing importance since the 1970s is the electrical engineering industry (televisions, refrigerators, washing machines).
In 2017, exports amounted to $1.9 billion. The main export partners are Russia, Romania, Germany, Ukraine, United Kingdom and Poland.
In 2017, imports amounted to $4.4 billion. The main import partners are Russia, Romania, Ukraine, China, Germany, Italy and Turkey.
Energy supply and traffic
One of the major problems facing Moldova is the almost total lack of natural energy resources. Moldova has an estimated 10 million tonnes of oil and 24 000 million cubic metres of gas in its reserves, which are, however, still practically un exploited. There are a few small hydroelectric plants along the Dniestr River and even smaller thermal electric plants, and of course there is firewood.
But together they supply only 1% of the total energy needs. Moldova is 90% dependent on imports from Russia. Railway lines run abroad to Odense in the Ukraine and the Romanian cities of Iasi and Galati. The airport in the capital Chisinau is economically important. Shipping is possible on the Dniestr and Proet rivers, but only makes a small contribution to the total transport of goods and people.
Sources
Williams, N. / Romania & Moldova
Lonely Planet
Belarus & Moldova : country studies
Federal Research Division, Library of Congress
CIA - World Factbook
BBC - Country Profiles
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