Riyadh, Saudi Arabia— Egypt’s economic growth is expected to decline to 4.5 percent in the fiscal year 2022-23 from 6.6 percent in 2021-22, affected by the Russia-Ukraine war overlapped with persisting COVID19-related disruptions, according to the World Bank’s Egypt Economic Monitor report.
But the growth is forecast to inch up after that as the country continues to push ahead with macroeconomic stabilization and structural reforms, the report stated.
While critical sectors continue to thrive, especially gas extractives, benefiting from the higher global prices and the resilient communications, agriculture and construction sectors, other activities are expected to continue performing below potential, including manufacturing.
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During the fiscal year 2022-23, inflation is projected to surpass the Central Bank of Egypt’s target range between 5 and 9 percent and remain in double digits, following the impact of depreciation, imported inflation, supply bottlenecks, and the potential continuation of adjustments to fuel prices.
Fiscal consolidation is also expected to decelerate in 2022-23 due to higher inflation rates alongside the government social mitigation package.
While the social measures announced by the government in 2022 will offer mitigation to an extent, poverty rates are still forecast to rise as inflation gets reflected in real incomes.
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Moreover, the state’s spending on health and education is expected to drop to 1.3 percent and 2 percent of the gross domestic product, respectively, disclosed the World Bank report.
Over the medium term, the North African country’s debt-to-GDP ratio will maintain its downward trajectory.
Meanwhile, Egypt’s non-oil exports surged 12 percent during the first 10 months of 2022 to hit $30.4 billion, up from $27.1 billion during the same period a year earlier, reflecting a $3.3 billion increase, according to data from the General Authority for Export and Import Control.
Later today, Egypt’s Monetary Policy Committee of the CBE is set to hold its last meeting before the end of 2022 to review interest rates.
Analysts expect policymakers to end the year with a significant increase of 200 basis points in the interest rates to support the Egyptian pound against the dollar and other foreign currencies and curb rising inflation.
The average forecast in the poll of 12 analysts estimated that the CBE would boost interest rates on deposits to 15.25 percent and lending interest to 16.25 percent.