Moldova enjoys a favorable climate and good farmland but has no major mineral deposits. As a result, the economy depends heavily on agriculture, featuring fruits, vegetables, Moldovan wine, and tobacco. Moldova must import all of its supplies of petroleum, coal, and natural gas, largely from Russia. Energy shortages contributed to sharp production declines after the breakup of the Soviet Union in 1991. As part of an ambitious economic liberalization effort, Moldova introduced a convertible currency, freed all prices, stopped issuing preferential credits to state enterprises, backed steady land privatization, removed export controls, and freed interest rates. The government entered into agreements with the World Bank and the IMF to promote growth. Recent trends indicate that the Communist government intends to reverse some of these policies, and recollectivise land while placing more restrictions on private business. The economy returned to positive growth, of 2.1% in 2000 and 6.1% in 2001. Growth remained strong in 2002, in part because of the reforms and because of starting from a small base. Further liberalization is in doubt because of strong political forces backing government controls. The economy remains vulnerable to higher fuel prices, poor agricultural weather, and the skepticism of foreign investors.

Following the regional financial crisis in 1998, Moldova has made significant progress towards achieving and retaining macroeconomic and financial stabilization. It has, furthermore, implemented many structural and institutional reforms that are indispensable for the efficient functioning of a market economy. These efforts have helped maintain macroeconomic and financial stability under difficult external circumstances, enabled the resumption of economic growth and contributed to establishing an environment conducive to the economy’s further growth and development in the medium term. Despite these efforts, and despite the recent resumption of economic growth, Moldova still ranks low in terms of commonly-used living standards and human development indicators in comparison with other transition economies. Although the economy experienced a constant economic growth after 2000: with 2.1%, 6.1%, 7,8% and 6,3% between 2000 and 2003 (with a forecast of 8% in 2004), one can observe that these latest developments hardly reach the level of 1994, with almost 40% of the GDP registered in 1990. Thus, during the last decade little has been done to reduce the country’s vulnerability. After a severe economic decline, social and economic challenges, energy uprooted dependencies, Moldova continues to occupy one of the last places among the European countries according to the income per capita. In 2002 (Human Development Report 2004), in Moldova the registered GDP per capita was US $381 equivalent to US $ 1,470 PPP, which is 5.3 times lower that the world average (US $ 7,804). Moreover, GDP per capita is under the average of all regions in the world, including Sub-Saharan Africa (US $ 1,790 PPP). In 2004, about 40% of population were under the absolute poverty line and registered an income lower than US $ 2.15 (PPP) per day. Moldova is classified as medium human development and is placed on the 113 spot in the list of 177 countries. The value of the Human Development Index (0.681) is below the world average. Moldova remains the poorest country in Europe in terms of GDP per capita: $ 2,500 in 2006.