The exchange rate between the Egyptian pound and US dollar will reach EGP 12.69 by the end of FY 2019/2020, according to a FocusEconomics Consensus Forecast report.
The FocusEconomics Consensus Forecast Middle East and North Africa report for June 2016 indicates that the exchange rate by the end of FY 2015/2016 will reach EGP 9.49, and further climb to EGP 10.01 by FY 2016/2017.
FocusEconomics added that the public debt in FY 2015/2016 is expected to reach 90.4% of the GDP, but will fall to 89.4% in FY 2016/2017. Meanwhile, the external debt is expected to reach $53.9bn in FY 2015/2016 (17.4% of the GDP), $59.9bn in FY 2016/2017 (18.3% of the GDP) and $82bn in FY 2019/2020 (21.6% of the GDP).
FocusEconomics expects the trade balance in FY 2015/2016 to reach $34.1bn, increasing slightly to $34.5bn in FY 2016/2017. The report explains that exports are expected to register at $19.6bn in FY 2015/2016, and increase to $20.5bn in FY 2016/2017.
Meanwhile, imports are expected to amount to $53.7bn in FY 2015/2016 with an increase to $20.5bn in FY 2016/2017.
The report indicates that Egypt’s GDP will likely grow at a moderate pace in the current year, and while the government’s fiscal reform plans are a step in the right direction, it remains to be seen if it will be able to meet its targets.
Nevertheless, economic growth is being restrained by US dollar shortages, macroeconomic imbalances, political uncertainties and slow reform implementation. As a result, FocusEconomics expects the GDP will grow only 4% in FY 2016/2017.
According to the report, inflation jumped from 9% in March to 10.3% in April, marking the first increase in five months. FocusEconomics’ analysts expect inflation to average 10.9% in 2016 and 10.5% in 2017.
The analysts attributed the rise in 2016 to the notable devaluation of the Egyptian pound in March.
The report also stated that Egypt’s economy is standing on shaky ground.
“A drop in tourism has been dragging economic activity down since late2015. Fewer tourists and lower revenues from the Suez Canal have caused the country’s international reserves to plunge,” the report read. “The government’s fiscal consolidation targets recently laid out in the 2017 draft budget come as positive news. Measures to curb the deficit include a reduction in the state subsidy bill by 14% and implementation of the belated value-added tax”.
FocusEconomics Consensus Forecast panelists expect total investments to increase to 6.2% in FY 2015/2016 and further rise to 6.9% in FY 2016/2017.
The government targets a growth of 4.4% in FY 2016 and 5.2% in FY 2017.
FocusEconomics Consensus Forecast panelists expect the economy to expand to 3.3% in FY 2015/2016, which is unchanged from May’s forecast. For FY 2016/2017, the panel sees economic growth at 4%.