Moldova’s Q1 2025 GDP Contracts Due to Export Decline#

Moldova’s economy contracted by 1.2% year-on-year in the first quarter of 2025, primarily due to a decline in goods exports, Economy Minister Doina Nistor announced, as reported by bne IntelliNews on June 25, 2025. Despite strong domestic demand, external and internal challenges weighed on economic performance. This analysis summarizes the key factors behind the contraction, positive economic trends, and the outlook for 2025.

Economic Contraction and Export Decline#

GDP Contraction: Moldova’s GDP fell by 1.2% y/y to MDL88.2bn (€4.54bn) in Q1 2025, marking the third consecutive quarterly decline after a 1.3% drop in Q4 2024. Key sectors like industry (-8.7% y/y) and professional services (-20.4% y/y) dragged down growth.
Export Challenges: A significant decline in goods exports, not offset by growth in services exports, was the primary driver of the contraction. Nistor noted, “Growth in the services export sector could not compensate for the decline in goods exports.”
External Factors: Global uncertainties, including armed conflicts, tariff wars, and geopolitical tensions, impacted Moldova’s export performance. The U.S. tariffs introduced in April 2025 and disruptions in European automotive supply chains reduced orders for Moldovan suppliers.
Internal Factors: Domestic challenges included reduced re-export volumes (e.g., mineral fuel to Ukraine, which diminished due to shifting logistics), a 2024 drought affecting agricultural output, and difficulties in the automotive sector due to fewer production orders.

Robust Domestic Demand#

Consumption and Investment: Domestic demand remained strong, with household consumption rising by 4.9% y/y and gross fixed capital formation surging by 16.1% y/y. Inventory changes also bolstered aggregate demand.
Investment Trends: Nistor highlighted five consecutive quarters of increased entrepreneurial investments, driven by long-term lending for equipment and new technologies. “We are seeing positive signals in the economy, especially in the investment sphere,” she said.
Wage Growth: Average wages grew by 14% in 2024 and an additional 2–3% in early 2025, supporting consumer spending despite inflationary pressures.

Economic Outlook and Policy Measures#

2025 Forecast: The Ministry of Economic Development and Digitalisation (MDED) projects 2% GDP growth for 2025, with 2–3% growth expected through 2028. The European Bank for Reconstruction and Development (EBRD) forecasts a slightly lower 1.8% growth, citing risks like energy price shocks and political instability.
Agricultural Recovery: A strong grain harvest, accounting for ~75% of agricultural output, is expected to support recovery in 2025, offsetting the 2024 drought’s impact.
Public Investment: A €1.9bn EU support package, conditional on reforms, aims to accelerate infrastructure and growth initiatives, reinforcing the government’s commitment to recovery.
Challenges Ahead: An energy crisis in early 2025, following the halt of Russian gas supplies to Transnistria, led to an 80% surge in electricity tariffs, fueling inflation (15% in 2025). The current account deficit widened to 16% of GDP in 2024, driven by a trade gap and lower remittances. Political instability, with elections looming, and suspended USAID projects add further risks.

Broader Context and Sentiment#

Transnistria’s Crisis: Moldova’s pro-Russian Transnistria region faces a severe economic downturn, with a projected 12% GDP drop and 30% industrial collapse in 2025 due to halted Russian gas supplies, potentially destabilizing the broader Moldovan economy.
EU Integration: Moldova’s pro-EU stance and ongoing accession talks provide opportunities for growth, with increased exports of agricultural products like grapes and apples to the EU market. However, structural reforms are needed to align with EU standards.
X Sentiment: Posts on X reflect concerns about Moldova’s economic challenges, particularly in Transnistria, with a 45% drop in industrial exports and a tightening election race between pro-EU and pro-Russia factions, adding to economic uncertainty.

Conclusion#

Moldova’s economy contracted by 1.2% in Q1 2025, driven by a decline in goods exports due to global tariff wars, a 2024 drought, and automotive sector challenges, as outlined by Economy Minister Doina Nistor. Despite robust domestic demand, fueled by strong consumption and investment, external and internal factors hindered growth. With a projected 2% GDP growth for 2025, supported by an expected agricultural recovery and a €1.9bn EU investment package, Moldova aims to rebound. However, risks from energy price shocks, political instability, and Transnistria’s economic crisis require careful management to ensure sustained recovery.