The National Bank of Moldova has lowered its average annual inflation forecast for 2022 and expects a further change in the inflation trajectory towards a decrease.
According to the updated forecast, the rise in inflation will be 28.8% in 2022 (-0.7 percentage points from the previously forecast indicator), and by 16% (+0.3 percentage points) in 2023. This was announced by the President of the National Bank of Moldova, Octavian Armasu, during the presentation of the fourth this year's NBM Inflation Review. He noted that, as predicted earlier, at the end of the third quarter of 2022, inflation indicators in Moldova reached peak values - at the end of October, inflation was 34.6%, but starting from the fourth quarter, inflation will enter a new phase of decline for the next forecast period (8 months). At the same time, according to Armasu, numerous uncertainties still remain and there are risks of new shocks and factors. Over the next few quarters, food prices, regulated tariffs, and core inflation will contribute the most to average annual inflation, while fuel prices will contribute the least. From the second quarter of 2024, the inflation rate is expected to return to the target level of the National Bank (5% ±1.5 p.p.). The inflation forecast of the NBM is based on the hypothesis of slower economic growth in the euro area in 2023, with a more pronounced inflation growth in the euro area both in the current and next years, as well as a pronounced economic downturn in Russia. Thus, in the Eurozone, economic growth in 2022 is projected at 3%, in 2023 - 0% (instead of 2.7% and, accordingly, 1.4% in the previous forecast). In Russia, in 2022, GDP is expected to decline by 5.1%, and not by 8.4%, as previously predicted, and the decline in 2023 will be more pronounced - 2.9% instead of 2.2%. The inflation rate in the euro area will be 8.3% in 2022 (instead of the previously forecasted 7.6%) and 5.8% in 2023 (the previous forecast was 3.6%). In Russia, inflation will be 14% and 6.8% in 2022-2023. (instead of 15.8% and 10.2%). The euro/dollar ratio is expected in 2022-2023 at the level of 1.04 and 1.01 (instead of the previously predicted 1.07). The forecast for the ratio of the Russian ruble to the US dollar has also been adjusted: for 2022 - from 70.6 to 68.9 and for 2023 - from 75.7 to 73.5. At the end of 2022, Brent oil will fall in price from $104.9 to $101.5 per barrel, and the forecast for 2023 provides for a more pronounced decline - from $91.5 to $87.7. World prices for natural gas, according to forecasts, will continue to grow in the next 2 years: in 2022 - from the previously forecasted $960.3 to $991.6 per 1 thousand cubic meters, and in 2023 - from $1,077 to $1,142.4 per 1,000 cubic meters. However, by 2024, world oil prices are expected to decline (to $79.8%/bbl) and gas (to $925.2/1,000 cubic meters). Food prices in the world in 2022 will grow by 15.4% (instead of the previously forecasted 15.1%), while in 2023 they are expected to decline by 2.3%, and in 2024 - by 4%. When developing the forecast, the National Bank took into account the growth rates of remittances, revenues and expenditures of the national public budget, tax revenues and lending in the national currency. In 2023-2024 the growth of possible sources of financing in real terms is expected - remittances, salaries, social payments, loans. Armasu specified that the forecast was made in the absence of a draft fiscal policy and a draft budget for 2023.// 15.11.2022 — InfoMarket
