Page 58 - SE Outlook Regions 2024

3.7 External Environment - Moldova Moldova’s current account deficit moderates in H1, 2023
Moldova’s current account (CA) deficit moderated by 12-13% y/y in each of the first two quarters of 2023, mainly reflecting a smaller trade gap, which eventually brought the 12-month CA deficit down to $2.35bn at the end of June from $2.84bn at the end of 2022.
The CA deficit to GDP ratio, calculated for the rolling 12 months, dropped to 15.5% at the end of June from 17.3% at the end of 2022.
Besides the grants of nearly $1bn (+30% y/y) and the thin foreign direct investments (under $100mn), the resources generated by households and the rise in gross external debt covered the CA gap safely. They pushed up the official forex reserves by some $1.3bn to $4.9bn.
Moldova’s households used their savings to finance last winter’s gas crisis.
Net foreign exchange sales by Moldovan households neared the equivalent of $3.0bn (20% of GDP) in the 12-month to June, a massive 56% up y/y and the equivalent of $2.5bn (+80% y/y) in euros, National Bank of Moldova (BNM) data revealed.
Partly, the increase was caused by low base effects, namely households’ reluctance to sell foreign currency in February-March 2022 immediately after Russia invaded Ukraine. But later, local households and possibly refugees from Ukraine (and Russia) cashed their savings to cope with the rising prices.
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