Moldova Country Risk Report 20 2018
After GDP growth came in above expectations in 2017, supported by a benign external environment, we expect a slowdown in 2018 in line with waning momen-tum in the region and heightened political uncertainty in the run up to the November parliamentary election.
Household consumption will remain the engine of growth in the coming years, supported by rising real wages, relatively low unemployment, and steady remit-tance inflows.
Domestic political risk is likely to remain elevated in the months before the key election, with the country's pro-EU and pro-Russian factions seeking to gain control of policy direction. With fears of external interference high, there is a risk that the losing side will reject the outcome, increasing the risk of social unrest and further weakening confidence in the country's democratic institutions.
Russian-backed separatist forces will continue to undermine Chisinau's authority and threaten Moldova's territorial integrity, remaining a key source of tension within the country. Though not our core view, the risk of intervention from Moscow will remain present in the period ahead.
Risks to government stability are likely to stay elevated throughout the ten-year forecast period, with deep divisions undermining efforts to promote consensus politics.
Mass emigration and an ageing population pose long-term risks to labour productivity and the tax base, which in turn will put a growing strain on public finances.
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