The National Bank lowered the average annual inflation forecast for 2023 from 13.7% to 13.3%, and for 2024 - from 5.5% to 5.1%.
The President of the National Bank of Moldova, Octavian Armasu, announced such data at the meeting of the Economic Press Club on Monday, at which the second Inflation Review of this year was presented. According to him, the annual inflation rate will continue its downward trend in the current year and then be relatively stable until the end of the forecast period. Inflation is expected to return to the target range (5% ±1.5 pp) in Q4 of 2023 and remain until the end of the forecast horizon. Inflation growth will be supported by managed prices, core inflation and food prices. The annual growth rate of fuel prices will decline for the first two quarters in a row, after which it is expected to increase until the second quarter of next year, and then there will be stabilization. Aggregate demand will be negative during 2023 and Q1 next year due to lower household finance, negative external demand, lower year-over-year agricultural production, and restrictive monetary conditions. The tax impulse will soften the decline in aggregate demand and lead to an increase in aggregate demand starting from the second quarter of next year. At the same time, real monetary conditions for aggregate demand will be restrictive for the entire forecast period. The new forecast of the National Bank suggests a more favorable international economic context compared to previous periods, but still below potential and with many risks and uncertainties. The outlook for the global economy is clouded by rising interest rates in advanced economies and a relatively slow recovery in demand in China. International prices are down from previous year highs as a result of risk dissipation, as well as reduced consumption relative to potential supply in many segments. Compared with previous rounds of forecasts, when the energy crisis in Europe assumed a bleak outlook at the regional level, the outlook for the economy in the euro area is more optimistic in the current round. Thus, in 2023, the economy in the euro area is expected to grow by 1% (previously, zero growth was predicted), and in 2024 - by 1.6% (instead of 1.2%). Instead of falling by 2.9% in 2023, Russia is expected to grow by 0.7%, while in 2024 its GDP is expected to grow at 1.3%. The inflation rate in the euro area will be 5.3% in 2023 (instead of the previously forecasted 5.9%), but in 2024 it will be slightly higher than expected - 2.9% (previously forecasted 2.4%). In Russia, inflation will be 7% (instead of 6.2%) in 2023, and in 2024 - 4.6% (instead of 5.5%). The euro/dollar ratio is expected in 2023-2024 at the level of 1.11 and 1.18 (in the previous forecast, indicators of 1.08 and 1.09 were taken into account), while the depreciation of the Russian ruble is expected - its ratio to the US dollar will be 78 and, respectively, 89 rubles in 2023-2024. Euribor rates will be higher than previously predicted: in 2023 - 3.4% (instead of 2.9%), in 2024 - 3.6% (instead of 2.7%). Natural gas prices are expected to fall, but oil prices to rise. Thus, the cost of Brent crude oil will be $82.7 per barrel in 2023, and $77.7 in 2024 (instead of $79.4 and, respectively, $76.4). According to forecasts, world prices for natural gas will decrease in the next 2 years: in 2023, the cost will average $709.8 per 1,000 cubic meters (the previous forecast was $852.7 per 1,000 cubic meters), and in 2024 - $664.2 per 1,000 cubic meters (instead of $851.7). Prices for agri-food products on the world market will decrease in 2023 by 10% (previously predicted a decline of 7.2%), while in 2024 the rate of decline will slow down to 0.9% (previously forecasted an increase of 0.3%). // 15.05.2023 — InfoMarket
