Moldova’s GDP soared by 5.8% y/y in Q2, driven by the construction sector that generated 32% more value added in the quarter, thus contributing 3.3pp to the overall growth, the statistics office informed. Consumption advanced at more moderate rates,
In the whole of H1, the average GDP growth was 5.2% y/y, with the construction sector contributing 2.2pp.
The performance was achieved despite the political crisis that ended in June, after the general elections in February.
The record growth in Q2 comes after the 4.4% advance in Q1 and overall 4.0% average growth rate in 2018. The outlook remains positive, after the formation of the new government that already resumed the programmes with the International Monetary Fund (IMF) and the European Union expected to unlock more tranches of the financing attached.
When reaching a staff-level agreement with Moldova in July, the IMF projected the country’s GDP growth would ease to 3.5% from 4% in 2018 but given the developments an upward revision is likely.
Beside the construction sector, retail and industry also contributed to the growth. The value added generated by industry increased by 3.9% y/y and the sector contributed 0.6pp to the GDP growth. Services to households advanced by a stronger rate, of 5% y/y and the sector thus contributed 1.0pp to the growth.
On the utilisation side, gross fixed capital formation was the main growth driver. In volume terms, it increased by 26.1% y/y and contributed 6.9pp to the overall growth of demand. Notably, consumption increased by only 1.7% y/y and contributed 1.7pp to the growth of demand. Internal demand strengthened so much more than GDP that the net imports accounted for 22% of it.