Living Standards and Poverty in Moldova

Abstract

Poverty in Moldova is widespread and endemic, with poverty rates averaging 60 percent from 1997 to 2002. As a starting point for a profile of poverty rates and a description of recent trends, it is useful to put the macroeconomic situation in context2. Following significant declines in GDP in the early nineties, GDP per capita began to recover through 1997, only to suffer due to vulnerability of the Moldovan economy to the Russian crisis. GDP fell by more than 6 percent in 1998; by 1999, GDP per capita was similar to levels in 1994. Overall, GDP declined by over 65 percent between 1990 until 2000. The movement in the poverty rate in recent years has paralleled these significant macroeconomic developments. In the context of the rapid economic changes in Moldova, the objective of this report is to examine multiple indicators of well-being to provide greater insight into the profile and dynamics of poverty in Moldova. A profile of poverty is crucial to the design of effective anti-poverty measures that will enable the country to reduce poverty more effectively while promoting economic growth. The next sections of this report describe: (i) an overview of expenditure-based poverty and inequality measures, (ii) international comparisons (iii) non-income based measures of poverty, (iv) poverty profile and changes in risk, (v) patterns of poverty during crisis and recovery, and (vi) recommendations for improving the monitoring of poverty and living standards.