The National Bank kept the average annual inflation forecast for 2023 at 13.3%, and for 2024 it lowered it from 5.1% to 4.8%.
The President of the National Bank of Moldova, Octavian Armasu, announced such data at the meeting of the Economic Press Club on Monday, where the third this year's Inflation Review was presented. According to him, annual inflation will return within the target range of 5% ±1.5 percentage points already in October 2023 and will continue until the end of the forecast horizon. Inflation growth will be supported by managed prices, core inflation and food prices. The annual rate of core inflation will decrease in the first two forecast quarters, and from next year will increase moderately until the end of the forecast period, except for the last two quarters. Food prices will decline at a moderate pace. The annual level of regulated prices will decrease significantly in the first half of the forecast horizon and, starting from Q3 2024, will quickly return to a somewhat positive, but stable level. The annual level of fuel prices will reach a minimum, after which it will increase in the first half of next year and decrease by the end of the forecast period. Aggregate demand is expected to be negative throughout the forecast period, which is determined by the restrictive nature of real monetary conditions and the negative impact of external demand. A positive tax impulse will support domestic demand, except for the last two quarters of the forecast. Monetary conditions, though declining, will limit aggregate demand. Containment of inflation and its forecast within the target level against the backdrop of excess liquidity of banks and further reduction in interest rates is expected to provide a positive outlook for economic activity. 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. Thus, in 2023, the economy in the euro area is expected to grow by 0.5% (previously forecasted growth of 1%), and in 2024 - by 0.9% (instead of 1.6%). In Russia, expected economic growth is at 0.4% in 2023 (previous forecast - 0.7%), while the forecast for 2024 has not changed (+1.3%). This is due to a decrease in aggregate demand both in the EU and in the Russian Federation. The inflation rate in the euro area will be 5.4% in 2023 (instead of the previously forecasted 5.3%), but in 2024 it will be slightly lower than it was predicted in the previous review - 2.4% (previously - 2.9%). In Russia, inflation this year will be lower (5%) than previously expected (7%), and in 2024 - 5.2% (instead of 4.6%). In 2025, economic growth in the EU and Russia is expected to be almost the same (+1.6% and, respectively, 1.5%), while inflation in the Russian Federation will be higher than in the EU (4% vs. 2%). The euro/dollar ratio is expected in 2023-2024 at the level of 1.09 and 1.12 (in the previous forecast, indicators of 1.11 and 1.18 were taken into account), and the ratio of the dollar to the ruble will be 81.1 and 84.8 in 2023-2024 and 84.9 in 2025 (earlier forecast was 78, 89 and 100, respectively). Euribor rates will be lower than previously predicted: in 2023 - 3.3% (instead of 3.4%), in 2024 - 3.4% (instead of 3.6%), in 2025 - 3% (as previously predicted). Despite the latest perturbations in the market, the National Bank predicts a decline in oil prices. Thus, the cost of Brent oil will be $78.5 per barrel in 2023, and $74.7 in 2024 (instead of $82.7 and, respectively, $77.7). A significant decrease in world prices for natural gas is also expected - by the end of 2023, they will average $636.4 per 1 thousand cubic meters (the previous forecast was $709.8 per 1,000 cubic meters), and in 2024 - $607.9 per 1,000 cubic meters (instead of $664.2). In 2025, gas prices will be even lower and will amount to $524.1/1,000 cubic meters. Prices for agri-food products on the world market will decrease in 2023 more than previously predicted - by 11.8% (previously a decline of 10% was predicted), while in 2024 the growth rate will be more tangible - 3.2% against the previous forecast growth of 0.9%. // 14.08.2023 — InfoMarket.
