Wednesday, October 27, 2021

Moldova | Introduction

EuropeMoldovaMoldova | Introduction

Moldova’s capital is Chişinău. Romanian is the official language, although Russian is commonly spoken. Moldova is a multi-ethnic country that has experienced ethnic strife. This war resulted in the establishment of the self-proclaimed Transnistria Republic in eastern Moldova in 1994, which has its own government and currency but is not recognized by any other UN member nation. Despite the collapse of political talks, economic ties between these two regions of Moldova have been restored. Moldova’s main religion is Orthodox Christian.

The majority of Moldova’s population is employed in food production and processing. Moldova, formerly known as the Soviet Union’s “garden,” has lost most of its traditional Russian markets for agricultural goods and is looking for new foreign markets. The majority of foreign currency profits come from remittances made by employees compelled to work abroad due to poverty and poor local prospects.

Geography

Moldova is located between latitudes 45° and 49° N, and mostly between meridians 26° and 30° E (with a tiny region east of 30°). The entire land area is 33,851 square kilometers.

The majority of the country is located between two rivers, the Dniester and the Prut. The Prut river, which joins the Danube before flowing into the Black Sea, forms Moldova’s western boundary. Moldova has just approximately 480 m (1,575 ft) of Danube access, and Giurgiulești is the sole Moldovan port on the Danube. The Dniester is the major river in the east, running from north to south and receiving the waters of Răut, Bâc, Ichel, and Botna. Ialpug flows into a Danube liman, whereas Cogâlnic flows into the Black Sea liman chain.

Despite its proximity to the Black Sea, the nation is landlocked. While the majority of the land is steep, altitudes seldom surpass 430 m (1,411 ft), with the Bălănești Hill being the highest point. The hills of Moldova are part of the Moldavian Plateau, which formed geologically from the Carpathian Mountains. The Dniester Hills (Northern Moldavian Hills and Dniester Ridge), the Moldavian Plain (Middle Prut Valley and Bălți Steppe), and the Central Moldavian Plateau (Ciuluc-Soloneţ Hills, Cornești Hills—Codri Massive, “Codri” meaning “forests”—Lower Dniester Hills, Lower Prut Valley, and Tigheci Hills) are its subdivisions in Moldova. The Bugeac Plain, located in the country’s south, is a minor flatland. Moldova’s land east of the Dniester River is divided between portions of the Podolian Plateau and parts of the Eurasian Steppe.

The capital, Chișinău, is located in the center of the nation, as are Tiraspol (in the eastern part of Transnistria), Bălți (in the north), and Bender (in the south-east). Gagauzia’s administrative center is Comrat.

Climate

Moldova has a somewhat continental climate; its closeness to the Black Sea results in a warm and sunny environment.

Summers are hot and lengthy, with temperatures average about 20 °C (68 °F), while winters are moderate and dry, with January temperatures averaging 4 °C (25 °F). Annual rainfall varies considerably, ranging from about 600 mm (24 in) in the north to 400 mm (16 in) in the south; lengthy dry periods are not uncommon. The greatest rainfall comes in early summer and again in October, with frequent heavy showers and thunderstorms. Heavy summer rains often cause erosion and river silting due to the uneven topography.

On 21 July 2007, the hottest temperature ever recorded in Moldova was 41.5 °C (106.7 °F) at Camenca.

On 20 January 1963, the lowest temperature ever recorded was 35.5 °C (31.9 °F) at Brătușeni, Edineţ county.

Demographics

According to preliminary statistics from the 2014 census, there are 2,913,281 people living in Moldova (in territories controlled by the central government), a drop from the number reported in the 2004 census. The urbanization rate is 45 percent, with 45 percent of the entire population residing in cities.

Cultural and ethnic composition

The word “Moldavian” was originally used to designate the people of the Moldavian Principality. Austria acquired the northern portion of the principality, which became known as Bukovina, in 1775; a second split in 1812 resulted in Russia annexing the eastern part of Moldavia, which became known as Bessarabia. The ethnic Moldavians who were partitioned did not go through the same nation-building processes as their ethnic counterparts in the Danubian Principalities, which identified as the new Romania. As a result, speakers of Romanian in Bessarabia adhered to a “Moldavian” identity.

Until the interwar era, Bessarabia had a Moldavian identity, while ethnic Romanians in Bukovina had a Romanian identity even before the Great Union. Peasants in all three sections of ancient Moldavia, Romanian, Austrian, and Russian, were more inclined to identify as Moldavians than educated city residents.

According to the 2004 Moldovan Census (areas under central government administration) and the 2004 Transnistria Census (areas under breakaway authority control, including Transnistria, Bender/Tighina, and four neighboring communes):

Self-identificationMoldovan
census
 % Core
Moldova
Transnistrian
census
 % Transnistria
+ Bender
Total %
Moldovans2,564,84975.81%177,38231.94%2,742,23169.62%
Ukrainians282,4068.35%160,06928.82%442,47511.23%
Russians201,2185.95%168,67830.37%369,8969.39%
Gagauz147,5004.36%4,0960.74%151,5963.85%
Romanians73,2762.17%2530.05%73,5292.16%
Bulgarians65,6621.94%13,8582.50%79,5202.02%
Romani12,2710.36%5070.09%12,7780.32%
Poles2,3830.07%1,7910.32%4,1740.11%
Others / undeclared30,1590.89%27,4544.94%57,6131.46%
TOTAL  3,383,332  100%  555,347  100%  3,938,679  100%

There is continuing debate about whether Romanians and Moldovans are the same ethnic group, specifically if Moldovan self-identification represents an ethnic group separate from Romanians or a subset of Romanians. There were also many accusations that the ethnicity statistics were manipulated: Seven out of ten Council of Europe observation groups observed a substantial number of instances in which census takers advised respondents to identify themselves Moldovans rather than Romanians. To complicate interpretation, 18.8 percent of respondents who identified as Moldovans said that Romanian was their native tongue.

Religion

Orthodox Christians, who make up 93.3 percent of Moldova’s population, were not asked to indicate which of the two major churches they belong to for the 2004 census. Both the Moldovan Orthodox Church, which is independent and subject to the Russian Orthodox Church, and the Orthodox Church of Bessarabia, which is autonomous and subordinated to the Romanian Orthodox Church, claim to be the country’s national church. Protestantism accounts for 1.9 percent of the population, while other faiths account for 0.9 percent, non-religious people account for 1.0 percent, atheists account for 0.4 percent, and 2.2 percent did not respond to the religion question on the census.

Economy

Following the collapse of the USSR in 1991, energy shortages, political instability, trade barriers, and a lack of administrative capability all contributed to the economy’s downturn. Moldova adopted a convertible currency, liberalized all prices, ceased providing preferential loans to state companies, supported gradual land privatization, eliminated export restrictions, and liberalized interest rates as part of an ambitious economic liberalization program. To encourage growth, the government engaged into agreements with the World Bank and the International Monetary Fund. The economy recovered from its downturn in the late 1990s.

Moldova’s economy has fully recovered from the drought-related recession that occurred in 2012. Following a 0.7 percent drop in 2012, the economy grew by 8.9 percent in 2013, due to a significant recovery in agricultural and associated sectors, private consumption, and exports. Inflation has stayed within the NBM’s (National Bank of Moldova) target range of 5% 1.5 percentage points. The total budget deficit fell to 1.8 percent of GDP in 2013 from 2.2 percent in 2012, owing in part to the failure to complete investment projects. The external accounts continued to improve, with the current account deficit reducing to approximately 512 percent of GDP as a result of robust export performance, limited import growth, and continuing high remittance inflows. International reserves have risen to $2.8 billion (5 months of imports or 105 percent of short-term debt). The real effective exchange rate (REER) fell 312 percent. Although estimates suggest that the real exchange rate may be somewhat overvalued, external competitiveness seems to be generally sufficient, as shown by good sustained export success. The short-term economic prognosis, on the other hand, is bleak. The major risks to the near-term forecast include severe vulnerabilities and governance problems in the banking sector, policy slippages in the run-up to elections, an increase in geopolitical tensions in the area, and a further slowdown in activity in key trade partners. Moldova is extremely susceptible to changes in remittances from overseas workers (24% of GDP), exports to the Commonwealth of Independent States (CIS) and the European Union (EU) (88% of total exports), and donor funding (about 10 percent of government spending). The primary transmission Remittances (including owing to possibly returning migrants), foreign trade, and capital movements are all avenues via which negative exogenous shocks may affect the Moldovan economy. According to the staff’s spillover analysis, further strengthening of fiscal and external buffers would be essential for reducing the effect of external shocks, especially given Moldova’s close connections and synchronized economic cycle with trade partners.

Moldova substantially met the major goals of the joint ECF/EFF (IMF financial credit)-supported program, which ended on 30 April 2013. The economy has rebounded well from the drought-related recession in 2012, but it will decelerate in 2014. Financial stability, fiscal policy slippages in the run-up to the 2014 legislative elections, a further downturn in activity in key trade partners, and an escalation of geopolitical tensions are key threats to the near-term picture.

Corporate governance is a significant issue in the banking industry. According to the FSAP recommendations, major flaws in the legal and regulatory frameworks must be rectified as soon as possible to guarantee the financial sector’s stability and soundness. Moldova has accomplished significant budgetary restructuring in recent years, but this trend is already reversing. Resisting pre-election temptations for selective expenditure increases and returning to a course of budgetary reduction would decrease the country’s dependence on very large donor contributions. Fiscal structural changes would assist to ensure long-term viability. Monetary policy has succeeded in keeping inflation within the NBM’s target range. Going ahead, the NBM must be prepared to adopt a tightening bias if inflationary pressures emerge. The inflation targeting regime may be strengthened. The implementation of structural changes proposed in the Moldova 2020 National Development Strategy (NDS) will assist increase potential growth and decrease poverty, particularly in the business environment, physical infrastructure, and human resource development sectors. The extraordinary recovery of Moldova from the terrible recession of 2009 was mainly due to solid macroeconomic and financial policies, as well as structural changes. Despite a little recession in 2012, Moldova’s economic development was among the best in the region between 2010 and 2013. Economic activity rose by approximately 24% over the course of the year; consumer price inflation was kept under control; and real earnings increased by roughly 13% over the course of the year. This growth was enabled by sufficient macroeconomic stabilization measures and ambitious structural changes undertaken in the aftermath of the crisis as part of a Fund-supported program. Moldova signed an Association Agreement with the EU in November 2013, which contains provisions for creating a Deep and Comprehensive Free Trade Area (DCFTA).

Early in 2013, a political crisis resulted in policy slippages in the fiscal and banking sectors. The political crisis that erupted in early 2013 was resolved in May 2013 with the formation of a government backed by a pro-European center-right/center alliance. However, policy implementation delays prohibited the final evaluations under the ECF/EFF arrangements from being completed.

Despite a significant reduction in poverty in recent years, Moldova remains one of Europe’s poorest nations, and structural changes are required to support long-term development. In 2011, 55 percent of the population was poor, according to the Europe and Central Asia (ECA) regional poverty threshold of US$5/day (PPP). While this is a substantial decrease from 94 percent in 2002, Moldova’s poverty rate remains more than twice the ECA average of 25 percent. The NDS—Moldova (National Growth System) 2020, released in November 2012, focuses on many key sectors for economic development and poverty reduction. Education, infrastructure, the financial sector, the economic environment, energy usage, the pension system, and the judicial framework are among them. Moldova has made considerable progress in achieving and maintaining macroeconomic and financial stability since the regional financial crisis in 1998. Furthermore, it has undertaken many structural and institutional changes that are required for the effective operation of a market economy. These measures have aided in the maintenance of macroeconomic and financial stability in the face of adversity, allowed the return of economic recovery, and contributed to the establishment of an environment favorable to the economy’s medium-term growth and development.

The government’s EU integration objective has resulted in some market-oriented development. Moldova’s economy grew faster than anticipated in 2013 as a result of increasing agricultural output, economic measures implemented by the Moldovan government since 2009, and the receipt of EU trade advantages, which connected Moldovan goods to the world’s biggest market. During the summer of 2014, Moldova signed the Association Agreement and the Deep and Comprehensive Free Trade Agreement with the European Union. Moldova has also secured a Free Visa Regime with the EU, which is the most significant accomplishment in Moldovan diplomacy since independence. Nonetheless, development has been hindered by high Russian natural gas costs, a Russian restriction on Moldovan wine imports, increasing international inspection of Moldovan agricultural goods, and Moldova’s huge external debt. Longer term, Moldova’s economy is susceptible to political instability, a lack of administrative competence, entrenched bureaucratic interests, corruption, increased fuel costs, Russian pressure, and the separatist rule in Moldova’s Transnistria area. According to the IMF’s World Economic Outlook for April 2014, Moldova’s GDP (PPP) per capita is 3,927 International Dollars, excluding the grey economy and tax evasion.

Wine industry

The nation boasts a thriving wine sector. It contains 147,000 hectares (360,000 acres) of vineyard land, of which 102,500 ha (253,000 acres) are utilized for commercial production. The majority of the country’s wine output is for export. Many families have their own recipes and grape strands that have been handed down over centuries. Milestii mici is home to the world’s biggest wine cellar. It extends over 200 kilometers and contains almost 2 million bottles of wine.

Tourism

Tourism emphasizes the country’s natural scenery and heritage. Wine excursions are available to visitors all across the nation. Cricova, Purcari, Ciumai, Romanești, Cojușna, and Mileștii Mici are among the vineyards/cellars.