While Moldova has undertaken reforms to liberalize its economy, the business climate still poses challenges for companies. Complex regulations, a large informal sector and corruption continue hampering private sector development.
Bureaucracy remains burdensome with lengthy procedures for starting a business, obtaining licenses, paying taxes and enforcing contracts according to the World Bank. Accessing financing also remains difficult due to an underdeveloped banking sector.
Moldova remains one of the poorest countries in Europe, with a growth model reliant on remittance-induced consumption that has become less sustainable. The decline in remittances, combined with a shrinking and aging population, has resulted in low productivity growth and a significant number of lower-income households dependent on pensions and social benefits
Moldova is heavily dependent on Russian energy imports, which exposes the country to energy supply risks and price pressures. The country’s economy is still inefficient in energy use, which further increases its vulnerability to energy-related challenges.
These regulatory inefficiencies have contributed to Moldova ranking poorly on indices measuring competitiveness, ease of doing business and transparency. Improving governance standards is a priority to reassure investors.
Corruption and bureaucracy have historically stifled entrepreneurship and economic reform in Moldova. The government has taken steps to introduce laws and regulations in harmony with EU legislation but work remains to make local legislation and practices fully compliant with EU standards.
Businesses still face cumbersome licensing procedures and excessive authorization requirements, which can hinder the growth of small and medium-sized enterprises. Weather-related events such as— drought and flooding pose a significant risk to Moldova’s economy, particularly in the agriculture sector
However—the government has taken steps to simplify procedures, strengthen property rights and reduce the tax burden. EU integration reforms aim to bring legislation further in line with European standards over time.
Moldova’s investment climate shows signs of gradual improvement but requires sustained reforms. Enhancing transparency, skills and infrastructure would boost competitiveness and foreign interest in key industries like agriculture, manufacturing and services.
