The National Bank lowered its average annual inflation forecast for 2023 from 16% to 13.7% (-2.3 p.p.), and in 2024 it forecasts an inflation rate of 5.5%.
The President of the National Bank of Moldova, Octavian Armasu, announced such data at the meeting of the Economic Press Club on Tuesday, at which the first Inflation Review of this year was presented. According to him, by the end of the year there is a high probability of returning to the inflation band set by the National Bank (5% ±1.5 percentage points) or at least approaching these values. Almost all components of inflation for the next 3-6 months will have a downward trend, after which, depending on the economic situation, the trend may change. According to the National Bank, the average annual inflation rate will continue to decline rapidly in 2023, after which it will be relatively stable until the end of the forecast period. The growth rate of core inflation will decline rapidly for almost the entire 2023, and will slightly increase at the end of December and will remain until the end of the forecast horizon. Food prices will decline until the second quarter of 2024, after which they are expected to rise until the end of the forecast horizon. Regulated prices will decline substantially over the next 8 quarters, and fuel prices will continue to decline substantially during the first 3 consecutive forecast quarters, after which they are expected to rise slightly. According to Octavian Armasu, in the current round of forecasts, external assumptions point to weak external demand, lower global price growth and continued risks and uncertainties in the region. The National Bank is guided by the IMF forecast that in 2023 about a third of the world economies will enter a recession. Higher interest rates and subdued global demand will dampen global price growth, but it will remain well above pre-Covid-19 averages. In the region, the economic situation will continue to be affected by the war in Ukraine and the energy crisis in Europe. And although abnormally high temperatures for the cold season in Europe led to a drop in natural gas prices, the energy crisis in Europe is far from over and in the coming years it will have a significant impact on economic development. The inflation forecast of the NBM is based on the hypothesis of zero economic growth in the euro area in 2023 and the decline of the Russian economy by 2.9%, as well as insignificant economic growth in 2024 - by 1.2% and, respectively, by 1.4%. The inflation rate in the euro area will be 5.9% in 2023 (instead of the previously forecasted 5.8%) and 2.4% in 2024. In Russia, inflation will be 6.2% (instead of 6.8%) in 2023 and in 2024 - 5.5%. Based on the trajectory of interest rate forecasts in the US and the Eurozone, the National Bank expects an increase in the EUR/USD parity, respectively, a depreciation of the US dollar and a strengthening of the euro. Thus, the euro/dollar ratio is expected in 2023-2024 at the level of 1.08 and 1.09, and the ratio of the Russian ruble to the US dollar will be 71.6 and 78, respectively. World prices for natural gas, according to forecasts, will decrease in the next 2 years: in 2023, the cost will average $852.7 per 1 thousand cubic meters, and in 2024 - $ 851.7 per 1 thousand cubic meters. The cost of Brent oil will be $79.4 per barrel in 2023, and $76.4 in 2024. Prices for agri-food products on the world market will decrease compared to the highs of 2022. World food prices will fall by 7.2% in 2023 (previously forecasted a more moderate decline of 2.3%), while in 2024 the decline will slow to 0.3%.// 14.02.2023 — InfoMarket
