FocusEconomics panelists project that Egypt’s GDP will expand 4.5% in fiscal year (FY) 2022/23, which is down 0.2% from last month’s forecast, expecting that it will reach 5.2% in FY 2024.
Inflation softened to 13.1% in June compared to 13.5% in May but remained well above the upper bound of the Central Bank of Egypt’s (CBE) 5-9% target band. Average inflation should accelerate in H2 due to a weaker pound and the reliance on food and fuel imports. It should moderate from 1Q 2023 amid tighter monetary policy and a high base effect.
The FocusEconomics panelists see inflation averaging 13.2% in CY 2022, which is down 0.3% from last month’s forecast, and 9.7% in CY 2023.
The overnight deposit, overnight lending and main operations rates were left unchanged at 11.25%, 12.25% and 11.75%, respectively. This decision was driven by the economic slowdown and a more moderate than expected inflation panorama. The next meeting of the Central Bank of Egypt’s MPC is scheduled for 18 August. The panelists project the overnight deposit rate to end CY 2022 at 11.94% and CY 2023 at 11.5%.
FocusEconomics panelists project total investment to grow 8.6% in FY 2023, which is up 0.6% from last month’s forecast, and 7% in FY 2024. Moreover, exports are expected to rise by 20% by the end of current year and 11.4% in 2023. Meanwhile, Egypt’s imports are forecasted to increase in 2022 to reach 17.9% and to reach 8.4% in 2023.
Unemployment rate will remain at 7.4% of the active population in 2022 and will decrease in 2023 to reach 7.3%.
Public debt is projected to shrink to 91.5% of the GDP in 2022 compared to 91.9% of the GDP in 2021, and forecasted to reach 86.9% in 2023, according to FocusEconomics.
