Egyptian economic growth will be slightly slower this year than thought in April following an $8 billion agreement signed with the International Monetary Fund in March, a Reuters poll showed on Monday.
The median forecast in the Reuters poll of 17 economists was for gross domestic product (GDP) to grow 4% in the fiscal year that began on July 1, down from a forecast of 4.35% for the same year made in April and of 4.15% made in January.
The poll suggested the economy had grown 2.9% in the financial year that ended on June 30. This is lower than the 3% they had predicted in April and 3.5% in January. Growth should rebound to 4.99% in 2025/26, the poll showed.
James Swanston of Capital Economics said the tighter fiscal and monetary policy and a weakened pound after the IMF agreement would weigh on growth.
“The overall net impact is that economic growth will be weaker this fiscal year, but there are reasons to be more optimistic on GDP growth from FY2025/26 onward,” Swanston said.
The Gaza crisis has also hurt the Egypt economy by causing Suez Canal revenue to plunge by more than half and tourism growth to slow – two of Egypt’s main sources of foreign revenue.
Egypt’s planning minister predicted on June 2 growth would climb to 4.2% in 2024/25.
According to the median currency forecast from analysts the Egyptian pound will weaken to 49.50 to the dollar by end-June 2025 and 52.50 by end-June 2026.
Before letting it drop in March 2024 the central bank had kept the pound fixed at 30.85 to the dollar. It now trades at around 48.40 to the dollar.
The poll predicted annual headline inflation of 20.5% in 2024/25 and 12.05% in 2025/26. Inflation had fallen to 27.5% in June from a record high of 38.0% in September, far above the central bank’s target rate of between 5% and 9%.
The central bank’s overnight lending rate will decline to 21.25% as of end-June 2025 and 15.25% by end-June 2026, the analysts predicted.
Reuters