Fitch Solutions raises Egypt’s real GDP growth forecast to 5.6% for 2022

Fitch Solutions raised on Sunday its forecast for Egypt’s real Gross domestic product growth (GDP) by 0.1 percent for 2022 to reach 5.6 percent from the 5.5 percent it expected in April.

It also expected Egypt’s inflation to 13.2 percent, up from 10 percent it forecasted in April.

In May, the Egyptian government lowered its expectations for the country’s real GDP in the upcoming financial year to 5.7 percent from 6.4 percent due to the effects of Russia’s war in Ukraine.

Egypt’s annual inflation rate increased to 14.9 percent in April, up from the 12.1 percent recorded in March and 4.4 percent in the parallel month in 2021, the Central Agency for Public Mobilization and Statistics (CAPMAS), announced. In consequently, the inflation leapt to 13.1 percent in the civilized areas.

The report expected the Central Bank of Egypt (CBE) would raise key interest rates by additional three percent (300 basic points) for the financial year 2023-2024 to maintain positive real policy rates, tame inflation, and support the Egyptian pound and attractiveness of local-currency assets.

The CBE raised its key interest rates in March as the food and energy prices increased by one percent (100 basis points), it resulted the devaluation of the Egyptian pound by 14 percent.

Egypt expected to become the third highest inflation rate in the region following Lebanon (171 percent) and Iran (29 percent) as the inflation rose to 13.2 percent, the report mentioned.