The National Bank has worsened its inflation forecast for 2022-2023.
According to the second Inflation Report of the National Bank of Moldova (NBM) this year, presented by the NBM Governor Octavian Armasu on Friday, the average annual inflation forecast for 2022 was raised from 18.8% to 27.3% (+8.5 percentage points), and for 2023 - from 7.1% to 16.5% (+9.4 percentage points). According to estimates of the National Bank, inflation will peak in the third quarter of 2022 - it could rise to 31%, after which it will begin to decline. "If there are no new serious shocks, by the end of the forecast horizon (early 2024) the inflation rate will approach the target of the National Bank (5% ±1.5 p.p.). The main reason for the changes is the war in Ukraine and its economic impact on the world economy and the region. According to forecasts of the National Bank, inflation is expected to grow in all its components: prices for food products, regulated tariffs and petroleum products will rise, and core inflation will increase. At the same time, tariffs and food prices will have the greatest impact on inflation in the next four quarters. At the same time, according to Armasu, there is still a lot of uncertainty. "The uncertainty interval is quite wide, and it increases towards the end of the forecast period. According to the baseline scenario and provided for adequate measures of the monetary and credit policy of the National Bank, the inflation rate is projected at 27.3% in 2022 and 16.5% in 2023," said the head of the National Bank. The NBM inflation forecast is based on the hypothesis of slower economic growth in the euro zone and recession in Russia, higher inflation, higher prices of petroleum products, natural gas and foodstuffs. According to the National Bank, the economic growth in the Euro zone in 2022 is projected at 2.8%, in 2023 - 2.3% (the previous forecast provided 4% growth and, respectively, 2.5% growth). In Russia, GDP is expected to decrease by 9.9% and, accordingly, by 0.2% (the February forecast provided for 2.6% growth and, accordingly, 2.3% growth). Inflation in the Euro zone will reach 6.5% in 2022 (instead of the previously forecast 3.1%) and 2.4% in 2023 (the previous forecast was 1.6%), while in Russia inflation will reach 17.8% and 12.7% in 2022-2023 (instead of 6.7% and 4.6%). The EUR/USD ratio is expected to be 1.11 and 1.13 in 2022-2023 (instead of 1.13 and 1.15), while the forecast for the RUB/USD ratio in 2022 has been significantly adjusted from 72.4 to 92.4 and in 2023 from 72.5 to 97.9. In 2022, the price of Brent oil is expected to reach $98.4 per barrel (instead of $78.7, as forecasted earlier), and in 2023, the price per barrel will drop to $91.3 (the previous forecast was $73 per barrel). Global natural gas prices are projected to rise to $885.4 per thousand cubic meters in 2022 (the average price of $640.3/1 thousand cubic meters was projected in February), and in 2023, prices will fall to $817.8 per thousand cubic meters (which is almost twice as much as the previous forecast - $444.5). In 2022, global food prices are also expected to rise significantly: by 24.6% (the previous forecast - an increase of 5.2%). In 2023, global food prices are expected to decline by 0.1%, although previously a more pronounced decline of 1.9% was forecasted. // 13.05.2022 - InfoMarket
