Egypt’s growth outlook cut to 4% – poll

Egypt’s economic growth is expected to be lower than earlier anticipated this year, as per a Reuters poll released on Monday. The slowdown comes in the wake of a $8 billion deal with the International Monetary Fund (IMF) signed in March.

The median forecast among 17 economists surveyed was for gross GDP to expand by four per cent in the fiscal year that began on July 1.

This is a downward revision from the 4.35 per cent projected in April and 4.15 per cent estimated in January.

The poll also indicated that the economy grew by 2.9 per cent in the fiscal year ended on June 30, lower than the three per cent and 3.5 per cent forecasts made in April and January, respectively. However, growth is expected to rebound to 4.99 per cent in the 2025/26 fiscal year.

Capital Economics economist James Swanston attributed the weaker growth forecast to tighter fiscal and monetary policies, as well as the depreciation of the Egyptian pound following the IMF deal.

While acknowledging the challenges, Swanston expressed optimism about GDP growth prospects from the 2025/26 fiscal year onward.

The ongoing Gaza crisis has further impacted Egypt’s economy, with Suez Canal revenue plummeting by over half and tourism growth slowing down. These two sectors are key sources of fc for the country.

Egypt’s planning minister predicted in June that growth would reach 4.2 per cent in the 2024/25 fiscal year.

Annual headline inflation is expected to be 20.5 per cent in 2024/25 and 12.05 per cent in 2025/26, according to the poll.

This follows a decline from a record high of 38.0 per cent in September to 27.5 per cent in June, which is still above the central bank’s target range of five per cent to nine per cent.

Analysts predict the central bank’s overnight lending rate will decrease to 21.25 per cent by the end of June 2025 and further to 15.25 per cent by the end of June 2026.

Attribution: Reuters