According to a Reuters poll, Egypt’s economy will develop reasonably smoothly over the next three years, with inflation gradually falling from double digits and the pound depreciating in the short term.

According to a Reuters survey of 19 economists conducted July 6-20, GDP is expected to grow by a median of 5.5 percent in the fiscal year that started this month, up from 5.2 percent projected three months ago.

According to national news agency MENA, the administration is aiming for the same 5.5 percent rate. The economy increased by 6.2 percent in the fiscal year that ended in June, according to the planning minister earlier this month.

Economic growth is predicted to slow to 4.9 percent in fiscal year 2023/24, then accelerate to 5.4 percent in fiscal year 2024/25.

After recovering from the worst of the coronavirus slowdown, Egypt’s economy was struck a further blow by the fallout from Russia’s invasion of Ukraine, with investors withdrawing billions of dollars from the country’s treasury market.

Egypt is one of the world’s largest wheat importers and has been hit hard by increased oil and grain costs. It purchased the majority of its wheat from Russia and Ukraine, both of which provided a high number of visitors.

The country is part of a group that has asked the International Monetary Fund for more assistance. 

Key global commodity prices, including wheat, fertilizer, and oil, are now cooling, resulting in somewhat higher growth estimates, according to Allen Sandeep of Naeem Brokerage.

“I have a feeling all of that indirectly would provide some relief for emerging economies that are import dependent,” he added.

According to Sandeep, inflation, which was at its highest in three years but fell slightly to 13.2 percent in June, would persist in double digits as long as the Russia-Ukraine situation and sanctions against Russia continue.

Inflation is predicted to decline over the next two years, with an average of 10.0 percent in the current fiscal year, followed by 10.4 percent the following year, according to survey respondents.

Inflation, according to poll respondents, will decrease back to a median of 8.0 percent in the fiscal year 2024/25, staying within the central bank’s goal range of 5 percent -9 percent.

They predicted that Egypt’s currency will trade at 19.00 to the dollar by the conclusion of the current fiscal year, in June 2023, then falling to 19.86 by June 2024 and 20.00 by June 2025, a drop of more than 25% from the beginning of the year.

Egypt’s central bank allowed the Egyptian pound to fall from 15.70 to about 18.45 to the dollar on March 21. The pound was trading at about 18.94 pounds to the dollar on Wednesday.

According to the survey, the central bank is projected to hold the overnight lending rate at 12.25 percent by the end of the current fiscal year, before cutting it to 11.75 percent and 10.50 percent by the end of the next fiscal years, 2023/24 and 2024/25.

Source: Reuters

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