The NBM raises the forecast for the average annual inflation rate for 2021 by 0.7 percentage points - from 1.8% to 2.5%, while keeps unchanged the forecast for 2022 at 4.4%.
This is stated in the inflation report published by the National Bank of Moldova (NBM), the second this year. As noted by the National Bank, the increase in the forecast regarding annual inflation was largely due to the revision of forecasts for food prices, fuel and, to a lesser extent, regulated prices. The NBM-updated inflation forecast is based on the hypothesis of a gradual recovery of the world economy in conditions of uncertainty, but without serious risks. In the Eurozone, economic growth is expected to be 4.2% in 2021 and 4.3% in 2022. At the same time, Russia's GDP will grow by 2.9% this year, and by 2.6% next year. Inflation in the Eurozone countries in 2021-2022 will amount to 1.6% and 1.3%, respectively, and in Russia - 5.1% and 3.8%. The ratio of the EUR to the USD in the current and next year is projected at 1.2. The forecast for the ratio of the RUB to the USD for 2021 has been adjusted upward slightly - to 74 (the previous forecast was 72.4), and in 2022 it will be 71.2 (the previous forecast was 70.1). In 2021, oil prices are expected to grow even more - to $61 per barrel (+ 12.1% to the previous forecast), and in 2022 the cost of a barrel of oil will be $58.8 (+ 13.3% to the previous forecast). In 2021, a more significant increase in food prices is also expected - by 23% instead of the previously projected 14.3%, while in 2022 food prices are expected to rise by about 1% instead of the previously predicted decline of 1.2%. The Inflation Review N2 published by the National Bank of Moldova is a detailed analysis of macroeconomic events in the internal and external environment and mainly concerns the inflationary process, economic activity and the conduct of monetary policy. It also includes a new mid-term forecast that reflects the risks and uncertainties associated with the published forecast. The report shows that after the downward trend in the previous year, in the first quarter of 2021, the annual inflation rate reflects the beginning of an upward trajectory from 0.2% in January 2021 to 1.5% in March 2021. At the same time, it continues to be below the lower limit of the range of variation from the target of 5%. In the regional economic context affected by the pandemic, as well as against the background of corresponding internal restrictions and unfavorable weather conditions for the agricultural sector in the 4th quarter of 2020, the dynamics of economic activity in Moldova continued to be negative, outlining the prerequisites for a modest evolution of GDP in the 1st quarter of 2021. At the same time, aggregate demand will continue to recover, although it will be deflationary over the next 3-4 quarters. This will affect the recovery in external demand, improved monetary conditions and the recovery of agriculture this year. “Decisions on monetary policy strengthen the position of the National Bank of Moldova in creating monetary conditions to support the lending process, stimulate domestic demand and ensure an adequate level of liquidity in the banking sector, necessary for the recovery of the national economy,” said the Governor of the NBM, Octavian Armasu. // 11.05.2021 – InfoMarket
