The government has committed to eradicating pervasive corruption at the national and local levels, particularly in the judicial system. Vested interests—coupled with the prevalence of informal relationships, history of weak governance, particularly in the financial sector, and a corruption-prone court system—have proven to be obstacles, but the government continues to press ahead with anti-corruption initiatives.

The war in neighboring Ukraine has affected Moldova significantly, exposing its inherent vulnerabilities as a small land-locked country with close economic ties to both Ukraine and Russia.  Import disruptions in supply of food, energy, and raw materials have resulted in increased prices.  An escalation of the war could lead further refugee flows to and through Moldova and a challenging socioeconomic environment.

Moldova is implementing an ambitious reform agenda under the legacy of a large bureaucracy, which has enjoyed significant discretionary power under previous governments. The EU granted Moldova candidate status in June 2022, and in September 2023 the Government of Moldova submitted its progress report on fulfillment of nine conditions (many of which are focused on justice reforms) specified by the European Council as Moldova seeks to open accession talks. Corruption and bureaucracy have historically stifled entrepreneurship as well as the economic reform that a vibrant private sector would demand.  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.

Persistent challenges over the years include an aging population and a dwindling labor force, more pronounced since 2021 because of COVID-19 and then Russia’s war against neighboring Ukraine.

Intellectual property rights (IPR) legislation is quite advanced; however, IPR enforcement remains weak.

The large inflow of remittances has led to consumption-based growth, which exposes the economy to risks during regional downturns.  Dependence on Russian energy imports and an economy that does not efficiently use energy are challenges.  Weather-related events such as drought and flooding pose a constant risk to the agricultural sector.

Another challenge is Moldova’s relatively small market.