The leading provider of economic analysis and forecasts FocusEconomics has announced that Egypt’s GDP growth is set to pick up markedly this fiscal year (FY) —running until June 2022— following last year’s pandemic-induced slowdown. Stronger investment and export growth will spearhead the improvement.
FocusEconomics Consensus Forecast January 2022 projected that GDP would expand by 5.2% in FY 2022, which is up 0.1% from last month’s forecast, and 5.2% in FY 2023.
The report said that the economy shifted into a higher gear in Q1 2022 (July–September 2021), as conditions improved at a quicker annual pace, according to a preliminary estimate.
“Turning to Q2, growth should have moderated: The non-oil sector PMI remained in contractionary territory in October-December, and averaged lower than in Q1. In October merchandise exports expanded at the quickest pace in 5 months, while goods import growth also accelerated from the prior month. Meanwhile, on 5 January, the government unveiled the draft budget for FY 2023 —starting July 2022— which sees a rise in spending.
Additionally, FocusEconomics panellists projected total investment to grow 12.0% in FY 2022, which is up 1.2% from last month’s forecast, and 9.4% in FY 2023.
The increased public investment will aim to enhance the efficiency of basic services, expand the social protection network and increase employment opportunities. The budget sees the fiscal deficit narrowing to 6.1% of GDP and the debt-to-GDP ratio falling below 90%,” the report read.
It further highlighted that inflation continued to moderate in November, easing to 5.6% from October’s 6.3%, amid softer price increases for food. Inflation is set to accelerate from its current levels in 2022, bolstered by more robust economic activity. It is seen remaining comfortably within the Central Bank of Egypt’s 5–9% target band.
Focus Economics panellists see inflation averaging 6.7% in calendar year (CY) 2022, which is unchanged from last month’s forecast, and 6.6% in CY 2023.
At its 16 December meeting, the Central Bank of Egypt voted to keep the overnight deposit, overnight lending and main operations rates unchanged at 8.25%, 9.25% and 8.75%, respectively, amid relatively contained price pressures and a continued economic recovery.
Panellists also projected the overnight deposit rate by the end of CY 2022 at 8.28%, and 8.21% in CY 2023