Economic Overview
Even before the COVID-19, the economy eased back forcefully in the last quarter of 2019. Growth in 2019, at 3.6 percent, was supported by solid local interest drove by wage expands, settlements, credit extension and rising open spending. However development declined pointedly to 0.2 percent in the last quarter, as horticulture and power creation plunged, with a stoppage in fares and speculations.
Fiscal strategy loose before the emergency flare-up. Fully expecting disinflationary pressures, the arrangement rate was sliced to 5.5 percent in December. On the rear of more fragile residential interest and descending overflow from worldwide product costs, the swelling rate declined to 5.9 percent in March 2020. To guarantee sufficient liquidity, the national bank brought down the save prerequisite rate by more than 6 pp down to 34 percent and slice the approach rate further to a noteworthy low of 3.25 percent.
The emergency will burden on financial markets. While the banking system is well capitalized, new credits have diminished by 8.3 percent since the top in December 2019. The inflow of new deposits has diminished by 33%, yet the general store stock is as yet 2.5 percent over the end-2019 level, proposing supported trust in the financial segment.
Main sectors of industry
With a moderate climate and productive farmland, the agriculture segment has a significant job in Moldova’s economy: it speaks to 10.1% of the GDP and utilizes about 32% of the workforce (World Bank, 2019). Of the agriculture work power, around 25% are straightforwardly utilized by agri-endeavors, while the other seventy five percent are delegated independently employed (FAO). Moldova’s principle items are vegetables, natural products, grapes, grain, sugar beets, sunflower seeds, tobacco, meat, milk and wine.
The secondary sector it’s 22.7% of the GDP, utilizing 16.6% of the dynamic populace. Generally, the nation’s primary ventures have been assembling, horticulture and food preparing, material, clothing and footwear.
Taxation in Moldavia
The CIT rate is 12%. Farming enterprises are subject to a 7% CIT rate.
Small and medium companies that are not registered as VAT payers and correspond to specific criteria may opt for a special CIT regime of 4% on their aggregated income determined for accounting purposes, except for certain types of income.
Due to Covid – 19, VAT rate for HoReCa industry has been reduced from 20% to 15% starting 1st of May 2020.
Investing in Moldavia
“The economic potential is comparable: you don’t have natural resources, but good land, a favourable climate, and capable people.
We strongly believe in entrepreneurship. The Ministry of the Economy created a special program for attracting remittances. It is a pilot program called “1 +1”, because for each Leu invested the State gives you another one. We were inspired by similar programs in other countries. The first step is the training phase with Ministry officials and private sector experts who explain how to get financing and keep accounts, the sectors and prospects, and so on. Once the investment is planned, we offer all the necessary support and administrative information, plus 100% of the invested sum. Finally, we follow up for three years.” – Valeriu Lazar, Former Minister of the Economy and Deputy Prime Minister of Moldova.
Main reasons to invest in Moldavia:
- Moldova has bilateral investment treaties with 36 countries
- Cheap workforce
- Strategic location in Europe
- Free Economic Zones (FEZ) created to attract local and foreign investment and stimulate export