Economic research company FocusEconomics predicted that Egypt’s forecasted gross domestic product (GDP) would be stable for the fiscal year (FY) 2016.
However the company estimated that the growth of FY 2017 will be at 4.1%, which is 0.1% lower than last month’s report.
The forecasted GDP growth for FY 2016 is significantly lower than the 4%-4.25% growth predicted by the Egyptian finance ministry.
In its January report, the company lowered the forecasted GDP to 3.6%, after it predicted a rate of 3.8% in its December report. In February, the company lowered it once again to 3.5%.
Addressing the slowing down in economic growth, which was initially experienced in the first quarter of FY 2016 when growth slowed down to 3%, the report said that “recent indicators suggest that the situation remains difficult”.
“The PMI [Purchasing Managers’ Index] was in contractionary territory for the fifth consecutive month in February,” the report read. “Currency shortages are weighing heavily on economic activity.”
On a more positive note, the company’s panellists increased the total predicted investment by 0.4%, to reach 6.8% for FY 2016. The report added that it expects total investment to expand to 8.8% in fiscal year 2017.
The economics firms also lowered the estimated inflation to an average 10% in calendar year 2016, which is down 0.1% compared to the previous month’s projection. The firm added that inflation will decrease to an average of 9.9% for calendar year 2017.
Investment bank CI Capital has predicted a high average inflation rate, ranging between 11% and 11.5% in 2016, while Prime Investment expected the inflation rate will reach 10.8%.
Discussing the broader economic prospects of the Middle East and North Africa (MENA) region, FocusEconomics stated that “mounting geopolitical threats, a subdued global economic recovery, and the fall in oil prices are all exerting downwards pressure on the economic outlook for the MENA [region]”.
The company decided to cut its 2016 growth forecasts for the region for the fourth consecutive month to 2.6%. The aforementioned figure is a 0.2% drop from last month’s estimates.
“The downward revision was driven by deteriorating projections for 10 of the 16 countries in the region,” the report added. Egypt and Israel will likely grow the fastest in the region, the report noted.