Egypt’s economy is expected to grow fairly steadily over the next three years, with inflation gradually falling from double digits and the pound weakening in the near-term, according to a Reuters poll released on Thursday.
Gross domestic product (GDP) is set to expand a median 5.5 percent in the financial year that began this month, according to a Reuters poll of 19 economists taken July 6-20, up slightly from 5.2 percent predicted three months ago.
Egyptian government is aiming for the same rate of 5.5 percent, state news agency MENA reported earlier this month. The economy surged 6.2 percent in the 2021/2022 financial year that ended in June, the planning minister said earlier this month.
Economic growth is expected to ease to 4.9 percent in the following 2023/2024 financial year and quicken again to 5.4 percent in 2024/2025.
After successful handling of the repercussions of coronavirus crisis, Egypt’s economy is facing a new shock by the knock-on effects of Russia’s invasion of Ukraine, as investors pulled billions of dollars out of its treasury market.
Egypt is one of the world’s top wheat importers and has suffered from surging oil and grains prices. It often imports most of its wheat from Russia and Ukraine, two countries that also supplied a large number of tourists to the North African country.
Prices of key global commodity prices – in particular, wheat, fertiliser, and oil – are now cooling, leading to the slightly higher growth projections, Allen Sandeep, a senior expert at Naeem Brokerage, told Reuters.
“I have a feeling all of that indirectly would provide some relief for emerging economies that are import dependent,” Sandeep said.
Inflation Forecasts
Inflation, at its highest in three years but down slightly to 13.2 percent in June, will remain in double digits as long as the Russia-Ukraine crisis and sanctions against Russia remained, he added.
Survey respondents expected inflation would be lower in the next two years, slowing to an average of 10.0 percent in the current financial year, followed by 10.4 percent next year.
Poll respondents saw inflation falling back to a median 8.0 percent in the 2024/2025 financial year, within the Egyptian central bank’s target range of 5-9 percent.
Currency
They also expected Egypt’s currency to be trading at 19.00 to the dollar by the end of the current financial year, which ends in June 2023, weakening to 19.86 by June 2024 and 20.00 by June 2025, down more than 25 percent from levels at the start of this year.
On March 21, Egypt’s central bank had depreciated the currency to about 18.45 to the dollar from its previous level of 15.70.
