Moldova has an emerging, upper-middle income economy, It is a landlocked Eastern European country, bordered by Ukraine on the East and Romania to the West. It is a former Soviet republic and is a candidate member to the European Union.

History

On 2 January 1992, Moldova introduced a market economy, liberalising prices, which resulted in huge inflation. In 1993, a national currency, the Moldovan leu, was introduced to replace the Soviet rouble. The economic fortunes of Moldova began to change in 2001; since then the country has seen a steady annual growth of between 5% and 10%. Remittances from Moldovans abroad account for a quarter of Moldova's GDP, one of the highest percentages in the world.

Overview

Moldova's proximity to the Black Sea gives it a mild and sunny climate. The fertile Chernozem soil supports wheat, corn, barley, tobacco, sugar beet, and soybeans. Beef and dairy cattle are raised, and beekeeping is widespread. Moldova's best-known product comes from its extensive and well-developed vineyards concentrated in the central and southern regions. Moldova produces liqueur and sparkling wine. It is also known for its sunflower seeds, walnuts, apples, and other fruits. This makes the area ideal for agriculture and food processing, which accounts for about 40% of the country's GDP.

In 2018, Moldova produced: 1.1 million tons of wheat; 132 thousand tons of plum; 174 thousand tons of potato; 175 thousand tons of barley; 2.0 million tons of maize; 665 thousand tons of apple; 707 thousand tons of sugar beet (the beet is used to manufacture sugar and ethanol); 730 thousand tons of grape; 788 thousand tons of sunflower seed.

In addition to smaller productions of other agricultural products, like rapeseed (85 thousand tons). Moldova has a production of grape and apple between the 20th and 25th largest in the world, and a production of plum and sunflower seed between the 10th and 15th largest of the world.

Moldova has experienced economic difficulties, like many other former Soviet republics. Since its economy was highly dependent on the rest of the former Soviet Union for energy and raw materials, the breakdown in trade following the breakup of the Soviet Union had a serious effect, exacerbated at times by drought and civil conflict. The Russian rouble devaluation of 1998 had a deleterious effect on Moldova's economy, but economic growth has been steady since 2000.

Moldova has made progress in economic reform since independence. The government has liberalized most prices and has phased out subsidies on most basic consumer goods. A program begun in March 1993 has privatized 80% of all housing units and nearly 2,000 small, medium, and large enterprises, which led to a rise in homelessness and unemployment. Other successes include the privatization of nearly all of Moldova's agricultural land from state to private ownership, as a result of an American assistance program completed in 2000. A stock market opened in June 1995.

Inflation was brought down from over 105% in 1994 to 11% in 1997. Though inflation spiked again after Russia's 1998 currency devaluation, Moldova made great strides in bringing it under control: 18.4% in 2000, 6.3% in 2001, and 4.4% in 2002. In 2003 inflation escalated again – due mainly to a drought-driven rise in agricultural prices – reaching 15.7%, although it was reined in to 12.5% in 2004. The local currency appreciated considerably in 2003 and the first months of 2004. By May, the leu had reached its highest level since the end of 1999. After the National Bank of Moldova increased considerably its purchases on the foreign exchange market, the leu stabilized in November–December 2004 at 12.00–12.50 to the US dollar.

Moldova continues transitioning towards a free-market economy. The country recorded its fifth consecutive year of positive GDP growth in 2004, with year-end real GDP growth of 8%. This growth is impressive considering that, prior to 2000, Moldova had recorded only one year of positive GDP growth since independence. Budget execution in 2004 was also impressive, as actual consolidated budget revenues exceeded projections by 1.4% for most of the year.

Privatization results in 2004 were not significant: several smaller companies and one winery were privatized in 2004, but the government postponed indefinitely the privatization of several larger state enterprises, including two electricity distribution companies. Sporadic and ineffective enforcement of the law, economic and political uncertainty, and government harassment and interference continue to discourage inflows of foreign direct investment.

Imports continued to increase more rapidly than exports during the first nine months of 2004; Moldova’s terms of trade worsened, as higher-priced energy imports outpaced the value of Moldova’s main exports—agricultural and agro-processing goods.

During 2002, Moldova rescheduled an outstanding Eurobond, in the amount of $39.6 million, to avoid a potential default. In May 2004, Moldova redeemed promissory notes with a total value of $114.5 million to Russian Gazprom for just $50 million. Moldova informed its bilateral creditors in mid-2003 that it would no longer service its debts. The 2004 budget did provide funds for external debt service (interest) at some 6% of the government budget, the 2005 budget projects external debt service at some 4%. The International Monetary Fund (IMF) and World Bank resumed lending to Moldova in July 2002, and then suspended lending again in July 2003. Although Moldova passed a poverty reduction strategy in 2004, it has yet to reach an agreement with international financial institutions.

70% of total electrical energy power consumed in Moldova is imported from Ukraine and only 30% is produced in Moldova.

In 2021 Moldova's trade with Russia was $1.33b compared with the EU of $5.06. In 2022 the EU trade increased to $6.9b

Macroeconomic situation

As a whole, Moldova is doing well, despite a series of consecutive shocks, which included the doubling of the price of imported natural gas and 2006 Russian ban of Moldovan and Georgian wines, and a severe drought in 2007. Growth is estimated at 5 percent in 2007 and is projected to increase to 7 percent in 2008. Investment is picking up, and is beginning to replace remittances as the main source of growth—an encouraging sign that the earlier model of consumption-driven growth is changing.

Moldova increasingly faces the challenges experienced by other transition economies. Improved growth prospects have come with strong appreciation pressures from foreign exchange inflows, and a widening trade deficit. Foreign direct investment (FDI) has picked up and is estimated to have reached 12 percent of GDP in 2007, compared with 7 percent in 2006.

The main macroeconomic concern is inflation, which at 13 percent remains high for the region.

A deterioration in the merchandise trade balance due to strong import growth has been offset by improvements in net income and transfers, with a small improvement in the current account deficit to 12 percent of GDP. A resumption of wine exports to Russia in October was a major positive development, although volumes are likely to recover slowly.

Fiscal policy remained tight, ending 2007 with a modest deficit of 0.3 percent of GDP. Strong revenue performance was driven by robust VAT on imports, while expenditure was kept in line with the budget. However, the tax cuts introduced in 2008 may undermine the favorable fiscal position.

Monetary tightening in 2007 was complicated by the strong inflow of foreign exchange. The National Bank of Moldova increased reserve requirements from 10 to 15 percent, and raised policy interest rates by 2.5 percentage points. Nevertheless, the possibility of second-round effects from the drought, liquidity pressures from growing remittances and FDI, and the continued strong growth in credit and broad money suggest that upside risks to inflation are not yet fully contained.

In spite of some favorable background, Moldova remains Europe's poorest nation, resisting pursuing the types of reforms that have vastly improved the economies of some of its Eastern European neighbors. The Communist Party retained political control after winning the March 2005 parliamentary elections and re-elected its leader, Vladimir Voronin, as president in collaboration with the opposition. Although the government maintains a pro-Western stance, it has had trouble pursuing structural reforms and has made little progress on the International Monetary Fund's program to attract external financial resources. The parliament approved the government's economic growth and strategy paper in December 2004, but international financial institutions and Western investors will not be satisfied until the government begins to address fiscal adjustment, wage restraint, and payment of debt arrears. Despite the fact that the pace of privatization and industrial output has slowed, GDP growth was 7.3 percent in 2004, consumption continues to grow, and the currency continues to appreciate. The impasse in the pro-Russian Transnistria enclave, plagued by corruption and the smuggling of arms and contraband, continues despite international attempts at mediation.

In 2025, the current account deficit (CAD) reached a record level of 23% of GDP, and was financed through the drawdown of cash deposits and the issuance of debt, bringing external debt to 57.7% of GDP, while international reserves maintained the level of $5.1 billion. This was because the economy experienced a recession in the first half of 2025, despite a slight growth of 1.1% in the second quarter. While growth was supported by domestic demand, driven by improved wages and energy-related transfers and capital investments, exports declined as a result of drought, weak external demand, and a decline in reexports to Ukraine.

Business and economic environment According to the 2024 Index of Economic Freedom, Moldova ranks 99th globally with the overall score of 57.1, a decrease relative to 2023. Rule of Law Regulatory Efficiency Government Size Open Markets Parameter Score Change in Yearly Score from 2022 Parameter Score Change in Yearly Score from 2022 Parameter Score Change in Yearly Score from 2022 Parameter Score Change in Yearly Score from 2022 Property Rights 37.9 Business Freedom 60.2 Government Spending 64.4 Trade Freedom 75.6 Government Integrity 35.6 Labor Freedom 46.6 Tax Burden 93.4 Investment Freedom 55.0 Judicial Effectiveness 29.8 Monetary Freedom 71.2 Fiscal Health 82.1 Financial Freedom 50.0

*Everything above 60 is considered to be Moderately Free.

According to the 2020 Ease of Doing Business Index, Moldova's Distance to Frontier is 74.4/100 (48th globally), an increase of 1.3 relative to 2019.

*DTF (Distance to Frontier): Higher is better

Sectors Agriculture

Energy

Construction

Iron and steel

Banking and finance

There are no official barriers to founding foreign banks or branches in Moldova. The central bank the National Bank of Moldova has a responsibility to the management and control of all banks in Moldova.

In 2014 a major fraud took place, the 2014 Moldovan bank fraud scandal which nearly bankrupted the country. $1 billion disappeared from three Moldovan banks: Banca de Economii, Unibank and Banca Socială.The great Moldovan bank robbery , BBC News (18 June 2015) In the week preceding the 2014 Moldovan parliamentary election more than $750 million were extracted from the three banks in just three days, with a van loaded with stolen files from the banks being burned. A number of people were charged, Ilan Shor was convicted but fled justice.