Egypt’s economic growth is expected to be slower than forecast earlier, while inflation would stay higher and the Egyptian pound would weaken a little more than previous projections, a Reuters poll showed.
Egypt has been grappling with a protracted shortage of foreign currency, record inflation and a rising debt burden despite the economy maintaining relatively steady growth through shocks caused by COVID-19 and the Ukraine war.
The government secured a $3 billion loan from the International Monetary Fund (IMF) in December, alongside pledges that Egypt would move to a flexible exchange rate regime and reduce the state’s footprint in the economy while boosting the private sector.
However, the first review under the programme has been postponed as the exchange rate has remained steady at around 30.85 pounds to the dollar since March.
Median forecasts in the July 10-18 Reuters poll of 13 economists was for growth of 4.2% in the fiscal year that began on July 1, down slightly from a previous forecast of 4.5% in April. In 2024/25, growth will rebound to 4.8%, the latest poll showed.
Finance Minister Mohamed Maait said on Wednesday that preliminary figures showed real GDP growth of 4.2% during 2022/23.
The poll’s median forecast for the currency was that it would weaken to 34.8 Egyptian pounds to the dollar by the end of this calendar year, just below the previous forecast of 34 pounds.
Economists predicted that it would slip to 36.95 pounds to the dollar by the end of 2024, and to 38.90 pounds a year later.
The Egyptian pound has lost nearly 50% of its value against the dollar in a series of steep devaluations since March 2022, and has remained under pressure in the black market.
Annual headline inflation accelerated to a record of 35.7% in June, surging past the previous all-time high reached in 2017 following a sharp devaluation under a previous IMF programme.
The median forecast from 11 economists polled was for headline inflation to ease to 22% by the end of the current financial year in June 2024, dropping back to 13% a year later.
In the previous poll in April, economists submitted a median headline inflation forecast of 20.9% for the 2023/24 fiscal year, and 9.3% for 2024/25.
Bankers and analysts say an expansion of the money supply has been used to cover widening budget deficits, and risks fuelling further inflation and pressure on the currency.
Source: Reuters
