Page 52 - SE Outlook Regions 2023

The manufacturing industries contracted by 12.4% y/y in terms of
value-added and contributed 1.2pp to the quarter’s overall negative
performance.

Net taxes collected dropped by 8.7% y/y as a result of significant
subsidies extended to households and firms, contributing a negative
1.2pp to the quarter’s GDP as well.

2.6.2 External environment

Moldova’s current account (CA) gap widened to more than 14% of
GDP in the 12 months to September 2022, as the country depends on
expensive energy imports.

The external financing, from development partners, investors and
diaspora, was particularly abundant. The external deficit financing,
largely not debt generating, was particularly robust thanks to a
balanced combination of capital and financial transfers, though.which
explains episodic strengthening or the local currency.

The CA deficit in Moldova widened by 37% y/y to $618mn in the third
quarter of the year (Q3).

In the 12 months to September, Moldova’s CA gap reached $1.62bn,
25% more compared to the previous 12-month period, which accounts
for 14.1% of the exact same period’s GDP.

The CA gap to GDP ratio was 12.3% in the 12-month period ending
September 2021 and 7.4% as of September 2020. Before the
COVID-19 year, which had a positive impact on Moldova’s CA gap, the
external balance measured by the CA deficit to GDP gap surpassed the
10% threshold, but not by much.

52 SE Outlook 2023 www.intellinews.com