Discusses key economic indicators and trade statistics, which countries are dominant in the market, and other issues that affect trade.
Since gaining independence in 1991, Moldova has made some progress in adopting free-market economic reforms and enshrining democratic principles in its institutions. As a result of Russian-imposed import restrictions on Moldovan goods, exports shifted away from markets in the Commonwealth of Independent States (CIS) in favor of European markets.
Moldova’s business and investment climate still present significant challenges for those wishing to invest in or export to Moldova. Moldova’s newly-elected pro-Western President and government have committed to implementing reforms to strengthen Moldova’s institutions and improving its investment climate. In 2021, Moldova continued to deal with the aftershocks of the COVID-19 pandemic. The government raised enough revenue to cover critical expenses but could not finance necessary infrastructure and investment spending. Outmigration exacerbated labor shortages as Moldovans fled abroad for better wages.
The government continues to deal with the fallout from a massive bank fraud in 2014, when more than a billion dollars was stolen from Moldova’s state coffers. The government must continue to implement reforms, investigate and prosecute those responsible for the fraud, and tackle the pervasive corruption that continues to undermine public trust and slow economic development.
A member of the WTO since 2001, Moldova has signed free trade agreements with a number of countries, including of the former Soviet Union. In December 2006, Moldova joined the Central European Free Trade Agreement (CEFTA). In June 2014, Moldova and the EU signed an Association Agreement (AA). Part of the AA is the creation of a Deep and Comprehensive Free Trade Area (DCFTA) over a period of ten years. The DCFTA removes most import duties and supports regulatory harmonization between Moldova and the EU. Moldova signed a Free Trade Area (FTA) Agreement with Turkey in 2014.
Moldova benefits from its proximity to two large markets: the European Union, which absorbs over 65 percent of the country’s exports, and the Russia-dominated CIS, which accounts for 15 percent of Moldovan exports. Primary exports include food and beverages, agricultural products, apparel, and transport equipment.
Moldova’s main imports include: energy resources, natural gas, petroleum products, machinery, vehicles, and chemicals. Most consumer goods and inputs are also imported from abroad.
The government does not control the separatist region of Transnistria, a sliver of land on the eastern border with Ukraine. Although the region maintains a separate monetary unit and its own army and customs service, businesses on both sides engage in economic cooperation. Negotiations have been held under the so-called “5+2” format (Moldova, Transnistria, OSCE, Russia, and Ukraine + United States and EU) to find a settlement. While there has not been a resumption of hostilities since 1992, relations between the two sides remain contentious.