The National Bank of Moldova (NBM) reduced the forecast of average annual inflation for 2024 from 4.7% to 4.6% and for 2025 - from 5.3% to 4.9%
NBM Governor Anca Dragu announced this at a press conference on Tuesday while presenting the 4th Inflation Report this year. 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 p.p. and will remain within the set range throughout the forecast horizon. Inflation is projected to accelerate by the beginning of next year, followed by a gradual decline until the end of the forecast horizon, except for Q4 2025, when growth is likely. Average annual inflation, according to the National Bank's forecasts, will be 0.1 p.p. and, respectively, 0.4 p.p. below the previously forecasted level and will amount to 4.6% in 2024 and 4.9% in 2025. The minimum value of inflation, as before, is expected in Q2 2026 (+3.7%), and the maximum - in Q1 2025 (+6.2%). Inflation growth will be driven to a greater extent by food prices, core inflation and to a lesser extent by tariffs and fuel in Q3 2026. 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, while a cycle of slight increase in international prices is expected. In the euro area, the economy will grow below its potential, and the effects of monetary easing by the EU Central Bank will have the greatest impact on the services sector. Inflation in the euro area will be in line with the European Central Bank's targets. The EUR/USD parity under the influence of a softer monetary policy will have a weak volatility, but in the long term forecasts indicate that the ratio of these currencies will return to historical averages. International oil prices will decline slightly and natural gas prices will rise slightly. Global food prices will continue to rise due to unfavorable agro-climatic conditions this year. In Central and Eastern Europe, inflation will be under control, within the established target values, with the exception of Romania and Poland, where inflation is expected to be higher than forecast. The National Bank's updated forecast is based on assumptions that carry both inflationary and deflationary risks, and some factors have the nature of uncertainty. Among the inflationary risks Anca Dragu named geopolitical pressure in the Middle East and Ukraine; fragmentation of international trade, growth of international quotations for natural gas; vulnerability of prices for local fruits and vegetables to weather conditions; escalation of military conflict in the Middle East; wage increases in the public sector and the mechanism of compensation for energy costs in the cold season. Deflationary risks - slowdown of the global economic growth, decrease in the number of consumers located on the territory of Moldova, etc.,” the head of the National Bank of Moldova said. Among the uncertainty factors, the head of the National Bank mentioned the monetary policy to be applied in the EU and the US and the configuration of the international economic policy after the 2024 elections; uncertainty about the agricultural harvest in 2025, uncertainty about external financing and the framework of the state budget of Moldova for 2025. // 12.11.2024 - InfoMarket.
