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How do exchange rate fluctuations affect Moldovan import demand?

Exchange rate fluctuations can have a significant impact on import demand. As part of a technical note, the GET team examined the impact of fluctuations in the leu on Moldovan imports.

The focus of analysis is on the demand elasticity of aggregate import demand with a view to exchange rate fluctuations. Even if exchange rate fluctuations do not fully affect import prices, the impact can still be significant and limit trade activity.

In the case of Moldova, a 10% depreciation of the leu is expected to increase the prices of imported goods by 5-6%.

Technical Note

Further references on the topic

Economic Outlook in Eastern Partnership Countries

As part of an ongoing series, Berlin Economics periodically publishes an overview of macroeconomic developments in the GET advisory countries.

This Economic Outlook examines the economic development in the GET advisory countries Ukraine, Belarus, Moldova, Uzbekistan, Georgia and Armenia on the basis of relevant macroeconomic indicators. Another focus is the economic impact of the Covid 19 pandemic.

Download Economic Outlook

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