Fitch Solutions upgraded its projections for Egypt’s real GDP growth slightly to 6.1 percent during 2022, up from the six percent projected a month ago, according to the MENA Key Themes 2022: Mid-Year Review MENA Monthly Outlook Report.
The report expected Egypt’s inflation to stand at 13.2 percent throughout 2022 and the USD’s trading price against the EGP to stabilise at EGP 19.
For the first time in seven months, Egypt’s headline monthly inflation declined to 13.2 percent in June, down from May’s 13.5 percent, according to the recent readings published by the Central Agency for Public Mobilisation and Statistics (CAPMAS) in July.
On the other hand, annual headline inflation accelerated to 14.7 percent in June, up from the 5.3 percent recorded in June 2021.
Furthermore, the exchange rate in the Egyptian market has started to edge up since the devaluation of the EGP that the Central Bank of Egypt (CBE) applied in March on the back of growing global economic crisis due to the war in Ukraine.
According to the CBE, the USD’s current price in the Egyptian market is EGP 18.8 for buying and EGP 18.9 for selling.
On a regional level, the report projected the Middle East and North Africa (MENA) to be the fastest growing region globally, expecting its real GDP growth to accelerate to 6.5 percent in 2022, up from the 4.4 percent recorded in 2021.
This strong leap is driven by the expected real GDP growth in oil and gas exporting countries as a result of the easing of OPEC+ supply cuts and high oil prices that will feed into stronger non-oil economies, according to the report.
However, the report noted that net oil and gas importers will see real GDP growth ease, as most of these markets will struggle with elevating inflation, slower tourism activity, and weaker demand for exports.
Meanwhile, the region’s fiscal balance is anticipated to improve with an expected surplus of 2.1 percent of GDP in 2022 against a deficit of 1.4 percent of GDP estimated by the end of 2021 owing to the robust fiscal performance in oil and gas exporting countries, according to the report.
“High energy prices and rising hydrocarbon output will increase revenues for oil exporters, which in most cases will practicing restraint in their spending, further improving their fiscal positions. By contrast, most net hydrocarbon importers will see wider 2022 fiscal deficits than we had initially anticipated, as the rally in food and energy prices will inflate spending on subsidies and reduce revenues,” the report explained.
