The headquarters of the National Bank of Egypt, the St. Regis Cairo Hotel and the Hilton Cairo World Trade Center Residences tower over residential buildings in downtown Cairo, Egypt May 6, 2018. REUTERS/Mohamed Abd El Ghany
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CAIRO, April 21 (Reuters) – Egypt’s economy is set to grow 5.3% in the fiscal year ending June, but the pace is set to slow to 5.2% in 2022/23 and 5.0% in 2023/24 as tourism is falling and commodity prices and interest rates are rising, a Reuters poll showed on Thursday.
The Planning Ministry in November expected 5.6% growth this fiscal year, and the Treasury said in January it was targeting 5.7% growth in its draft budget for fiscal 2022-23. Continue reading
But last month the Planning Ministry lowered its real gross domestic product (GDP) growth target for 2022/23 to 5.5%, citing the impact of the Russia-Ukraine conflict. Continue reading
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A Reuters poll three months ago had forecast growth of 5.2% for 2021/22.
As one of the world’s largest wheat importers, Egypt imported most of its grain from Russia and Ukraine, which also supplied large numbers of its tourists.
Meanwhile, the Russian invasion prompted investors to withdraw billions of dollars from the Egyptian government bond market.
“Persistently high food and fuel prices can limit consumer spending. A significant loss of tourism from Europe and Russia can dampen economic growth. Rising interest rates can limit investment,” said Garbis Iradian of the Institute of International Finance (IIF).
Tourism has been devastated by the COVID-19 pandemic, with 2020/21 revenues plummeting to $4.9 billion from $9.9 billion the previous year. From July to December 2021, it recovered to $5.8 billion. Read more
In the latest Reuters poll, economists expected annual CPI inflation in cities to be 8.2% in 2021/22, 9.8% in 2022/23 and 7.6% in 2023/24.
Egypt’s inflation accelerated to 10.5% in March, the highest in almost three years, partly caused by commodity shortages following the Ukraine crisis, data from state statistics agency C`MAS showed. The central bank’s inflation target is between 5% and 9%. Continue reading
“We expect the rise in commodity prices to be temporary and a recovery should occur in FY24,” said BNP Paribas’ Pascal Devaux.
The Egyptian currency will remain relatively stable at 18.35 pounds per dollar until the end of 2022, the April 11-20 poll of 19 economists showed. The central bank allowed the currency to weaken to around 18.45 against the dollar on March 21 from its previous level of 15.70.
Economists expect the pound to weaken to 18.89 by the end of 2023 and 18.95 by the end of 2024.
The central bank is expected to raise its overnight interest rate to 10.75% from June from 10.25% now, and then raise it to 11.25% by the end of June 2023 before lowering it to 10.75% by the end of June 2024 , according to the survey.
(Additional articles from the Reuters Global Long-Term Economic Outlook package: )
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Reporting by Patrick Werr; Survey by Md Manzer Hussain in Bengaluru; Edited by Kim Coghill
Our standards: The Thomson Reuters Trust Principles.
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