Page 105 - SE Outlook Regions 2024

21.5% increase in 2022. However, bne IntelliNews has serious doubts as regards the quality of the retail sales data reported by the statistics bureau, at least as a proxy for private consumption. The same bureau reported private consumption (procurement) of goods contracted by 6.5% y/y in Q3
Such bright sales figures are counter-intuitive, since both the wages and the remittances to households have come under pressure since the beginning of the war in Ukraine. They failed to serve as a proxy for private consumption, hence Q3 retail sales data can not be used for concluding a resurgence in private consumption. Wages and remittances are more correlated with private consumption.
Most likely, the bright sales figures are a result of the change in methodology from the “retail sales” used until December 2022 and the “retail sales index, based on VAT reporting” from January 2023 (with a one-year history). Under the old definition, retail sales contracted by 1.5% y/y in 2022 – which is in line with the detailed GDP data but in sharp conflict with the 21.5% y/y surge of retail sales under the new definition.
Real wages in Moldova were hit severely by the high inflation and stayed flat since Q1, 2022 at a level at least 10% below the peak reached before the war in Ukraine.
Remittances to Moldovan households plunged dramatically when the war in Ukraine began, to recover only partly afterwards. Previously, around half of the remittances came from Russia.
Deposits, in banks or any other forms, apparently supported Moldova’s private consumption in 2022 and 2023 – but even this can’t explain such a massive surge as the 21.5% in 2022.
Detailed GDP data reveals that private consumption of goods contracted by 2.5% y/y and picked up by 3.2% y/y in H1, 2023. In Q3, private consumption of goods contracted by 6.5% y/y.
105 SE Outlook 2024 www.intellinews.com