Moldova

Moldova is an upper-middle-income economy with a population over 2.3 million people (2024). Located in Eastern Europe, it borders Romania and Ukraine.

Moldova’s growth has been affected by successive shocks: the COVID-19 pandemic, spillovers from Russia’s invasion of Ukraine, and energy price spikes. These shocks have exposed the limits of a remittance-led economic model and strained households and public finances. Structural constraints remain significant, including low domestic competition, weak market institutions, and labor and skills shortages. Poverty remains widespread, particularly in rural areas, reflecting distributional impacts of recent shocks. An aging population further constrains labor force participation, particularly for women, limiting jobs and welfare gains, and underscoring the need for urgent structural reforms. EU candidacy provides Moldova with a reform anchor to enhance productivity, competitiveness and institutional quality.

Read More

Read Less

Despite a modest 1.1% growth in the second quarter, Moldova’s economy was flat in the first half of 2025. The increase in domestic demand could not offset the decline in net exports.

Total consumption added 3.4 percentage points (pp) to growth, supported by strong wages and energy-related transfers. Capital investment added 8 pp amid favorable interest rates and inventory restocking. However, net exports were a major drag on growth, as imports growth was driven by stronger domestic demand, while exports declined due to drought-affected agriculture, reduced reexports to Ukraine, and weaker external demand. On the supply side, growth was supported only by construction, information technology and energy sectors, which together contributed 0.7 pp. Manufacturing, real estate and agriculture posted the largest declines, reducing growth by 0.9 pp. On the back of weak external demand and higher energy imports, the current account deficit (CAD) reached a record high in the first half of 2025. It almost doubled year-on-year to $1billion, or over 23% of GDP. The deficit was financed through a drawdown of cash and deposits, debt issuance, and modest foreign direct investment (FDI) inflows. External debt increased by 1 pp to 57.7% of GDP, while international reserves reached $5.1 billion at the end of August. Inflation has moderated compared to the beginning of the year, when energy prices spiked, but it remains in the upper bound of the target range.

In the first eight months of 2025, consumer prices rose 8.2%, driven by energy tariffs and elevated food prices amid weaker agriculture output. In response, the National Bank of Moldova reduced the policy rate by 25 basis points to 6.25%. The fiscal deficit narrowed to 3.3% of GDP in the first eight months of 2025, as revenue growth outpaced an increase in spending. Gains in social contributions, foreign grants, and VAT and income taxes offset higher spending on wages, goods and services, and social programs. Public and publicly guaranteed debt declined by 2.6 pp from end-2024 to 36.2% of GDP by June, while cash reserves rose by over 50%.

Read More

Read Less

Since Moldova joined the World Bank in 1992, over $1.8 billion has been allocated to more than 45  IBRD/IDA operations  in the country. Currently, areas of support include energy, regulatory reform and business development, land registration and valuation, education, roads, health and social sectors, agriculture, disaster risk management, environment, and water supply and sanitation. There are 14 active IBRD/IDA operations amounting to $830.9 million.

As part of the World Bank Group’s joint country representation for Moldova, the International Finance Corporation (IFC), with its focus on private sector development, continues to support Moldova's transition to a new growth model and EU accession by promoting green, resilient, and inclusive development. This is achieved through investments and advisory services that enhance efficiency, productivity, and value chain development across sectors. IFC aims to support the country in developing public-private partnerships (PPPs) in the transport sector and renewable energy.

Current engagements by the Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank Group, include investment through political and economic risk insurance offerings.

Together with World Bank-managed grants outside the IBRD/IDA envelope, the total World Bank Group program in Moldova since 1992 amounts to $2.5 billion in committed funds across over 100 operations.

Read More

Read Less

The current FY23-FY27 World Bank Group Country Partnership Framework (CPF) aims to address the dual challenges of the current crisis stemming from Russia’s invasion of Ukraine as well as longstanding and longer-term reform challenges, with a phased approach of activities to support the government’s development agenda and the goal to advance toward European Union accession. The CPF provides a flexible approach in identifying activities—both lending and analytical—under the overarching objective of supporting green, resilient, and inclusive development and competitiveness in Moldova. The framework is based on three high-level objectives: (i) increased formal employment; (ii) improved human capital; and (iii) increased green and resilient investments.

The objectives of the CPF focus on key areas including enterprise competitiveness, decreased regulatory burden, key aspects of health and education services, increased energy security and efficiency, and green investments, particularly in infrastructure and agriculture. A critical feature of the CPF is capacity-building and digitization efforts to strengthen systems and institutions across a broad swath of government and private sector actors at national and local levels.

Read More

Read Less