The National Bank of Moldova lowered the average annual inflation forecast for 2024 - from 5% to 4.7%, and for 2025 - increased it from 4.6% to 5.3%
NBM President Anca Dragu announced this at a press conference on Tuesday, presenting this year’s 3rd Inflation Review. She noted that the annual inflation rate will remain relatively stable throughout the forecast period. Inflation will fluctuate around the target of 5% ±1.5 percentage points and will remain within the established range throughout the forecast horizon. The minimum inflation value, as before, is expected in the second quarter of 2026 (+4%), and the maximum in the first quarter of 2025 (+6.4%). Almost all components of inflation will contribute to the growth of inflation - core inflation, food prices, regulated tariffs, and, to a lesser extent, fuel prices. It's about such factors as an increase in food prices due to the summer drought in 2024, imported inflation, an increase in excise taxes from 2025. At the same time, a deflationary impact of domestic demand is expected, a decrease in prices for petroleum products throughout almost the entire forecast period, and also core inflation. The updated forecast of the National Bank, as noted by Anca Dragu, is based on the hypothesis of an uncertain external environment with a tendency towards weak growth of the global economy. In the euro area, the economy will grow below its potential, with losses in the industrial sector compensated for by the services sector. The inflation rate in the euro area will correspond to the established target values of the European Central Bank. The euro/dollar parity will have low volatility. International quotations for oil and gas will remain at relatively high levels, but will have low volatility, and food prices in the world will continue to rise due to unfavorable agro-climatic conditions this year. In the region, the inflation rate will be under control, within the established target values. This applies to Central-Eastern Europe, with the exception of Romania. The updated forecast of the National Bank is based on assumptions that carry both inflationary and deflationary risks, and some factors are characterized by uncertainty. Among the inflation risks, Anca Dragu named trade and geopolitical pressure; escalation of the military conflict in the Middle East - may lead to rising energy prices; general rise in prices for international trade – increased distribution costs; vulnerability of prices for Moldovan vegetables and fruits due to unfavorable meteorological conditions in the subsequent period. Deflationary risks – higher interest rates on foreign markets in the long term and stagnation of global demand as a result of fluctuations in capital markets and commodity markets. Among the factors of uncertainty, the head of the National Bank named the geopolitical situation, the configuration of the world economy after the 2024 elections, the moment and size of the increase in regulated tariffs in Moldova, the agricultural harvest in 2024-2025, the volume of external financing for Moldova in 2025-2026. //13.08.2024 — InfoMarket.
