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Egypt economy forecast to grow 5.1% in year to June, 5.5% in 2022/23: Reuters poll -Breaking

by Mike Robinson

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© Reuters. In the midst of the COVID-19 pandemic, people walk along an alleyway filled with souvenir shops in a tourist marketplace. REUTERS/Amr Abdallah Dalsh

Patrick Werr

CAIRO, Reuters – Egypt’s economy will grow at 5.1% for the fiscal year ending in June 2022. It will then accelerate to 5.5% the following two consecutive years as tourism reboundes and coronavirus effects wane.

Last month, the central bank reported that economic growth increased to 7.7% during the fourth quarter of last fiscal year. This indicates that there will be 3.3% growth for 2020/21 over the 2.8% previous full fiscal-year estimates.

A July poll found that economists predicted 5.0% economic growth for next June.

Allen Sandeep from Naem Brokerage indicated that they expect growth in consumption to increase after a lower base following COVID, and for public investment to continue to be strong.

It will be crucial to determine if the growth continues in 2022/23. If so, then pandemic-like effects could hopefully recede substantially.

Slowly, tourism has begun to recover from COVID travel restrictions that were put into place March 2020.

The 2020/21 tourism revenue fell to $4.9 Billion from $9.9B a year prior. However, the revenue rebounded in the April to Juni quarter to $1.75billion from $305m in 2020’s same quarter.

The latest Reuters poll showed that economists forecast annual consumer price inflation of 6.0% to rise in 2021/22, before picking up to 6.4% by 2022/23 and 7.0% respectively in 2023/24. This is within the central banks’ target range, which is 5% to 9%.

According to the state statistics agency CAPMAS, Egypt’s September annual inflation was 6.6%, up from 5.7% in August. This is largely due to higher food prices.

According to the poll, which was conducted by 22 economists between Oct. 8-20, 15.81 Egyptian dollars per dollar will be lost by 2021 and 2022, 16.25 by 2022, and 17.24 at 2023 respectively.

According to the poll, the central bank will likely keep its overnight lending rates at 9.25% for the duration of 2021/22 through 2022/23 and then raise them to 10.25% towards the end June 2024.

RenCap’s Yvonne Mhango said in a note, “We believe Egypt is large CA (current accounts) deficit explains central bank’s reluctance in cutting interest rates.” The result was a strong rise in income outflows.

(Also see the Reuters Global Long-Term Economic Outlook Polls Package for other stories:

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