Annual inflation in February stood at 8.6%, 0.5 percentage points lower than in January. However, it remains above the upper limit of the ±1.5 percentage point deviation from the 5% target, IPN reports.

The National Bank of Moldova (BNM) states that February's inflation trend follows a trajectory similar to that anticipated in the Inflation Report of February 2025.

This trend was mainly influenced by a lower-than-expected impact of compensation measures on electricity tariffs and a slight upward trend in food prices. However, this positive deviation was partially offset by a decline in fuel prices.

According to BNM, domestic economic activity contracted by 1.3% in Q4 2024. By resource categories, this decline was mainly driven by a 40.8% reduction in gross value added in agriculture, forestry, and fishing due to the drought conditions in the summer of 2024.

Negative contributions to GDP dynamics during the reference quarter also came from the education sector, industry, and construction. However, their negative impact was partially mitigated by positive developments in real estate transactions, trade, hospitality, and information and communication services. From a consumption perspective, household final consumption continued to grow, whereas public administration final consumption declined.

BNM notes that the balance of risks in the inflation forecast is neutral, with a slight inflationary tilt in the short term and a disinflationary trajectory until the end of the forecast horizon. Uncertainties remain significant.

“The main sources of uncertainty include agricultural production levels, adjustments in utility tariffs, the availability of sufficient fiscal stimulus to revive economic activity, external financial assistance, as well as regional tensions and moderate regional demand associated with reciprocal sanctions,” the National Bank states.