THE REPUBLIC OF MOLDOVA – MID-RUN MACROECONOMIC OPPORTUNITIES AND CHALLENGES

In recent years, the economy of the Republic of Moldova has been confronted with the consequences of the unprecedented global exogenous shocks, the coronavirus pandemic, and the intensification of geopolitical tensions. The volume of GDP grew for the second year in a row in 2024, but at a slowing annual pace of 0.5%, according to the estimates of the International Monetary Fund (2025). Therefore, in 2024, the volume of economic activity was only 1.3% higher than the pre-pandemic level in 2019. This paper applies standard econometric tools (the Hodrick-Prescott filter) and uses the estimates and forecasts of the International Monetary Fund (2025) for the period 1993 – 2025 in order to assess the macroeconomic developments and the medium-run opportunities and challenges for the economy of the Republic of Moldova. According to our results, the economy of the Republic of Moldova would record an annual growth pace below its potential for the fourth year in a row in 2025. On the other hand, the annual potential growth pace changed the trend in 2024, after hitting the lowest level since the beginning of the 2000s. However, this annual potential growth pace would persist at lower levels compared to the pre-pandemic period in the coming years, in a context dominated by several structural challenges, including the decline of the population and the high levels of the twin deficits (the budget deficit and the current account deficit).