Large emigration of discouraged young workers accentuates negative demographic trends from aging. Higher and sustained economic growth is needed to accelerate income convergence, but important headwinds to labor supply, capital accumulation, and productivity depress future growth prospects: Despite averaging about 4 percent in the past two decades, GDP growth has been insufficient to achieve EU, emerging Europe, or world average income levels. Moldova has remained among the poorest countries in Europe since its independence in the 1990s. Notwithstanding successful stabilization efforts, deep structural weaknesses continue to depress living standards. The banking sector has been rehabilitated, credit growth has resumed, output growth has rebounded, inflation has been reduced, and public debt has returned to pre-crisis levels.ΔΆ. Policies helped improve confidence and supported a turnaround in the economy. This has occurred despite a volatile political landscape, with the course of the program stretching over tenures of three different governments and multiple electoral campaigns. Reforms were supported by the ECF/EFF blended arrangements and largely in line with recommendations from the 2017 Article IV consultation ( Box 1). Moldova has made significant progress in addressing important macro-financial vulnerabilities since the 2014 banking fraud.
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