SME’s situation within a DCFTA context through COVID-19 crisis

Abstract

Analyzing the negative impacts of the global pandemic (COVID-19) on the R. of Moldova economy, SMEs external trade performed within a DCFTA framework represents one of the most important vectors for keeping the local economy in good health. Once the COVID-19 pandemic struck the world, Republic of Moldova was no exception. The Covid-19 pandemic has caused a series of problems, and those caused by movement restrictions have led to economic bottlenecks for exporting companies which resulted in liquidity and cash flow problems. Bringing our minds back to the Association Agreement and directly to the DCFTA, it is appropriate to estimate it’s preliminary impact on Moldova’s economy. After 5 years of DCFTA creation and implementation, it has been experienced a significant boost of the trade between Moldova and the EU, which resulted in the increase of investments, jobs, wages and goods export growth with 40% (1.5 billion USD). In spite of the positive effect the Free Trade Association Agreement is having on R. of Moldova, still, there are present some issues of healthy competitiveness and increasing production capacity type, key factors for exporting SMEs. With all these being stated, this study aims to identify COVID-19 influence on local SME’s doing business within the EU marketplace. Also, this article presents some analysis of emergency projects established by the local authorities to support SMEs and deliver practical solutions that can bring about change. The methodology used in this research is based on the statistical data that reflect the development of Moldovan exporting enterprises after the entry into force of the Association Agreement and, implicitly, DCFTA; analysis of national legislation and policy documents to support SMEs in the country and foreign trade in the context of the DCFTA.