The National Bank of Moldova revised the inflation forecast for this year down to an average of 3.3%, from 3.7% anticipated in February. The new forecast projects an inflation rate of 4.9% for 2019, as opposed to 4.7% forecast in February, IPN reports.
National Bank vice governor Vladimir Munteanu on May 7 said the main inflation will decrease this year, but in 2019 will rise close to the Bank’s inflation target of 5%.
The annual growth rate of regulated prices in 2018 will decline to about minus 4%, but will increase back next year. After a slight growth at the start of the forecast period, fuel prices will go down. Food prices will decrease significantly this year, but will return to the traditional tendencies next year.
As to the risks associated with the new inflation forecast, Vladimir Munteanu highlighted, among the pro-inflationist ones, the escalation of geopolitical tensions, rise in crude oil prices and prices of other raw materials. The deflationary risks could be determined by the commercial tensions, mainly between the U.S. and China, and the significant tempering of the pace of global and regional economic activity.
The risks that could affect the real sector of the economy are related to the vulnerability of prices of national agricultural products owing to the weather conditions in the immediate period, the uncertainty concerning the harvest this year, the (eventual) reduction in prices of medicines and others.
The risks threatening the public finances sector derive from the excessive liquidity in the banking sector, intensification of lending in foreign currency amid the poor lending to the economy in Moldovan lei and from the risks related to the external financing of the country.
The annual rate of inflation last December was 7.3%.
