Moldova could approach EU living standards in 30 years if pursues major reforms

CHISINAU. Nov 26 (Interfax) – If Moldova pursues major reforms, it could ensure annual economic growth of over 5% in the medium term and achieve convergence with average European Union income levels within around 30 years, the World Bank said in its country economic memorandum for Moldova titled Achieving the European Union’s Standard of Living Within a Generation.

“Moldova faces challenges such as low productivity in non-agricultural sectors, an overreliance on declining remittances, and demographic shifts, characterized by shrinking and aging population,” the document says.

In the absence of any major reforms, the World Bank’s baseline scenario for Moldova assumes that a shrinking ratio of the working-age population would slow down the country’s real GDP growth to under 3% after 2040 and to around 2.3% in 2051-2070, it said.

“The simulations reveal that reforms raising the productivity of private firms, improving the quality of infrastructure services, and raising the skills of the workforce of the next generation would boost economic growth above 5% in the medium term so that Moldova achieves convergence with average EU income levels within three decades,” the memorandum says.

Among the key reforms recommended for Moldova, the World Bank proposed boosting investments in access to quality education and other social services, which should help address the economy’s skill shortages and spur growth in the longer term, it said.

The reform scenarios are based on the record of successful European and Central Asian countries and are estimated to raise Moldova’s growth by an additional 1.4 percentage points (pp) by 2030 and maintain a 1 pp higher growth rate in the long term as compared to the current trends and policies, it said.

As per the recommendations outlined in the memorandum, to achieve sustainable growth and European standards of living, Moldova should focus on increasing labor productivity and speeding up public investments, while simultaneously improving competitiveness, reforming government institutions, and facilitating the creation of jobs in various sectors.

In particular, the World Bank proposed specific modernization mechanisms to be applied in Moldova’s automobile and pharmaceutical sectors.

The World Bank has allocated over $2.1 billion since 1992 on implementing over 70 projects in Moldova, covering areas such as regulatory reform and business development, modernization of government services, tax administration, land registration, education, roads, health, disaster and risk management, agriculture, water, sanitation, and energy.

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Publish date : 2024-11-26 05:26:00

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