People shop at Al Ataba, a popular market in downtown Cairo
By Patrick Werr
CAIRO (Reuters) – Egypt’s economy will grow slower than previously expected this year after it signed an $8 billion financial support package with the IMF that came with conditions, but growth will accelerate next year, a Reuters poll forecast on Tuesday.
Egypt has also been clobbered by the Gaza crisis, which caused Suez Canal revenue to fall by more than half and tourism growth to slow – two of Egypt’s main sources of foreign revenue.
But its finances were given an unexpected boost in February when it sold the development rights for property along the Mediterranean to Abu Dhabi for $24 billion.
Weeks later it allowed its currency to sharply depreciate and signed on to a programme with the International Monetary Fund.
The median forecast in a Reuters poll of 14 economists was for gross domestic product (GDP) growth of 3.0% in the fiscal year that began on July 1, down from previous forecasts for the same year of 3.5% in January and 4.2% in July.
In 2024/25, however, analysts expected growth would climb to 4.35%, the latest poll showed, higher than the 4.15% forecast just three months ago.
On April 16, Finance Minister Mohamed Maait projected GDP would grow 2.8% in the fiscal year to end-June and by 4.2% next year. The IMF has forecast GDP growth of 3.0% in calendar 2024.
“The biggest factor will be private consumption and whether or not this recovers from March-June on the back of the relaxation of capital controls and the floating of the pound,” said Ivan Burgara of IIF.
“This will dictate whether we see a recovery in manufacturing and services which will boost or further hinder growth.”
The poll’s median currency forecast was for the Egyptian pound to weaken to 48.65 to the dollar by end-June 2024 and 48.25 by end-June 2025.
Before letting it drop last month the central bank had kept the pound fixed at 30.85 to the dollar since March 2023. It is now trading at around 48 to the dollar.
The annual headline inflation rate declined to 33.3% in March from a record high of 38% in September.
At its meeting on March 6 the central bank’s monetary policy committee said it expected inflation to remain substantially above its target of between 5% and 9% in the fourth quarter of 2024.
For the current financial year the median forecast was for average inflation to ease to 33.70% before slowing to 22.50% in 2024/25 and 9.50% in 2025/26.
(For other stories from the Reuters global economic poll:)
(Polling by Susobhan Sarkar; Writing by Patrick Werr; Editing by Alex Richardson)
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