The National Bank of Moldova (NBM) raised its annual average inflation forecast for 2022 from 27.3% to 29.5% (+2.2 p.p.) and expects its maximum values in Q3.
Governor of the National Bank of Moldova, Octavian Armasu, announced this while presenting this year's third NBM Inflation Report. He noted that in Q3 (October-November), the annual inflation rate may rise to 34.7%, but starting from Q4 the inflation rate will gradually decrease. In 2023 the National Bank reduced its previous forecast on the average annual inflation - from 16.5% to 15.7% (-0.8 percentage points). Armasu stressed that this is a baseline forecast, which does not take into account possible new shocks and factors. In the next few quarters, food prices, regulated tariffs, as well as core inflation will contribute the most to the annual average inflation rate, while fuel prices - to a lesser extent. The head of the NBM underlined that such a trajectory of the inflation forecast is supported by the latest decisions of the National Bank on monetary policy: inflation will return to the downward trajectory if it is possible to prevent the further growth of prices and to approach the target of the National Bank (5% ±1.5 p.p.). The NBM inflation forecast is based on the hypothesis of a slower pace of growth in the Eurozone in 2022-2023 and a more pronounced decline of the Russian economy in 2023, a higher inflation rate in the Eurozone, rising prices of petroleum products and natural gas. According to the National Bank, economic growth in the Eurozone is projected at 2.7% in 2022 and 1.4% in 2023 (instead of 2.8% and, respectively, 2.3% in the previous forecast). In Russia, GDP is expected to decline by 8.4% in 2022, rather than 9.9% as previously forecast, and the decline in 2023 will be more pronounced - 2.2% instead of 0.2%. Inflation in the Eurozone will reach 7.6% in 2022 (instead of the previously forecasted 6.5%) and 3.6% in 2023 (the previous forecast was 2.4%). In Russia, inflation will be 15.8% and 10.2% in 2022-2023 (instead of 17.8% and 12.7%). The EUR/USD ratio is expected to be 1.07 in 2022-2023 (instead of 1.11 and 1.13), whereas the forecast on the RUB/USD ratio has been significantly adjusted: in 2022, from 92.4 to 70.3 and in 2023, from 97.9 to 75.7. In 2022, the price of Brent crude oil is expected to rise from $98.4 to $104.9 per barrel, while the forecast for 2023 has remained virtually unchanged - $91.5. World natural gas prices, according to the forecast, will increase in the next 2 years: in 2022 - from the previously projected $885.4 to $960.3 per thousand cubic meters, and in 2023 - from $817.8 to $1077 per thousand cubic meters. At the same time, global food prices are expected to rise at a lower rate of 15.1% instead of 24.6%, with a 2.2% decline expected in 2023. As previously reported, monthly inflation in Moldova in June 2022 was 2.21%, annual inflation (over the last 12 months) - 31.83%, and inflation in January-June 2022 - 20.17%. Data for July will be released by the National Bureau of Statistics on August 10. // 09.08.2022 - InfoMarket
