Egypt’s economic growth is expected to slow down compared to what was predicted in the past. Reuters recently did a poll that shows that the falling value of the Egyptian pound, rising prices that make things less affordable, and the effects of the Gaza problem are all things that make the situation worse.
At the beginning of January, forty percent less money came in through the Suez Canal because of attacks at sea by the Houthis of Yemen, which forced ships to go in different directions. Because of what’s been going on in Gaza since October, the country’s tourism chances have also been shot down pretty badly.
Pieter du Preez, an economist from Oxford Economics, brought to light the many problems Egypt is having. He said, “Developments over the past month have seen the country being hit hard from various angles and directly to its main revenue generators.”
As of late, Moody’s, a global credit ratings agency, changed the outlook for Egypt’s government debt from steady to negative. Egypt also broke its promises to set up a flexible exchange rate system and sell state assets. The International Monetary Fund (IMF) had to send an agreed-upon $3 billion aid plan in December 2022 to help the country overcome its problems. A group from the International Monetary Fund is in Cairo, Egypt, to discuss possible ways to fix and add to the plan.
The most current survey by Reuters, which included fourteen analysts, shows that the median prediction for the fiscal year starting on July 1 is that GDP will grow by 3.5%. This is less than expected; in October, it was 3.9%, and in July, it was 4.2%. Forecasters think growth will rise to 4.15 percent in the fiscal year 2024–25. This is less than the 4.5 percent growth they thought would happen three months ago.
According to the previous month’s central bank report, the economy was slowing down. It went from 3.9% in the first quarter of 2023 to 2.9% in the second quarter of 2023. In the second quarter of 2023, the growth rate was considered to be 2.9%. The Monetary Policy Committee of the central bank thinks that real GDP growth will slow down even more in the fiscal year 2023–2024. After this, the economy will slowly get better.
The median currency prediction in the poll says that the Egyptian pound will fall to 40.00 against the dollar by the end of June 2024. Egypt’s pound will lose 43.00 of its value against the dollar by the end of June 2025. Since March, the pound’s set exchange rate against the dollar has been 30.85 to the dollar. This comes after the pound lost almost half of its value against the dollar the previous year. There was a black market price for the pound of 39 to the dollar before Israel’s war against Hamas in Gaza in October. The pound has lost value since then and is now worth about 61 to the dollar.
Since June, annual headline inflation has been at all-time highs. It was 33.7% in December, which is also a new high. According to the forecasts, the average inflation rate is expected to be 30.80% this fiscal year, and it will drop to 18.22% in 2024/25.
