Following the theft economists had feared the worst, especially since two of Moldova’s biggest trading partners, Ukraine and Russia, were mired in financial crises of their own. Yet since then the country has coped remarkably well. GDP shrank by a mere 0.5% in 2015 (whereas Russia’s fell by 4% and Ukraine’s tanked by 10%). Last year Moldova grew by 2%, fast by European standards.

Some credit must go to the government, which swiftly offered a blanket guarantee of deposits. The state in effect issued debt to cover every deposit in banks that failed. Moldova’s government finances look a little shakier as a result. But neither households nor companies have lost money directly. The government’s intervention has thus propped up consumption and investment. The tills at MallDova, a shopping mall in the capital, are still ringing.

The odd structure of the Moldovan economy also helped. It is heavily agricultural: about a third of workers are farmers. Most are smallholders. Few borrow much from banks, so few have noticed that credit has grown tighter. Good weather played a part: following dry conditions in 2015 cereal production rose by a third last year. A free-trade agreement with the EU in 2014 provides a ready market for Moldovan commodities, including its delicious wine.

Money sent back by Moldovan emigrants may have also softened the blow. Moldova is about twice as dependent on remittances as the Philippines, which is saying something. Though the flow has slowed, the weakness of the Moldovan leu ensures that expats sending money from the EU get a good deal.

Problems remain. Even the poshest areas of Chisinau have pockmarked roads and poor lighting. Corruption is rampant (though the IMF is helping the government to fight it), 15% of Moldovans are poor and higher government debt means fiscal policy will be tight. But for a place that usually makes the news for the wrong reasons, a glimmer of hope is about as good as it gets.

MOLDOVA is a country of ignominious records. It is by far Europe’s poorest place. Among countries that bother to count foreign tourists, only Tuvalu welcomes fewer. To these dubious achievements, this little Romanian-speaking former Soviet republic added a new one in 2014. A leaked report revealed that up to $1bn, equivalent to more than an eighth of the country’s GDP, had been stolen from three banks. Relative to the size of its economy, that may be the biggest bank fraud of all time. What happened next, however, was surprising.

Source: The Economist