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Egypt’s economy may increase 5.1 percent in the fiscal year that ends in June 2022, but 5.5 percent in each of the next two years as tourism recovers and the impacts of the coronavirus pandemic fade.
The central bank announced last month that economic growth accelerated to 7.7% in the fourth quarter of the previous fiscal year, implying 3.3 percent growth for the entire fiscal year 2020/21, up from a previous forecast of 2.8 percent.
In a July poll, economists anticipated that economic growth for the year ending in June would be 5.0 percent. “We expect consumption growth to pick up from a low base post-COVID and public investment to remain strong this year,” Allen Sandeep of Naeem Brokerage said. “What will be critical to see is if this growth is sustained in 2022/23, by when the pandemic effects should hopefully subside substantially.”
COVID travel restrictions were imposed in March 2020, and tourism has been slowly rebounding. Tourism revenue fell to $4.9 billion in 2020/21, down from $9.9 billion the previous year.
According to central bank data, it rebounded to $1.75 billion in the April-June quarter from a low of $305 million in the same period of 2020.
According to the most recent Reuters poll, experts anticipate annual urban consumer price inflation to rise to 6.0 percent in 2022/23, 6.4 percent in 2022/23, and 7.0 percent in 2023/24, all within the central bank’s target range of 5 percent to 9 percent.
Egypt’s annual inflation rate increased to 6.6 percent in September, the most in 20 months, from 5.7 percent in August, owing primarily to rising food costs, according to the national statistics agency CAPMAS.
According to a poll of 22 experts conducted Oct. 8-20, the currency will decline to 15.81 Egyptian pounds per dollar by the end of 2021, 16.25 by the end of 2022, and 17.24 by the end of 2023.
Rendering to the survey, the central bank is likely to keep its overnight lending rate at 9.25 percent in 2021/22 and 2022/23, then raise it to 10.25 percent by the end of June 2024.
“We believe Egypt’s sizeable CA (current account) deficit explains the central bank’s reluctance to cut interest rates,” causing a strong increase in imports and income outflows, RenCap’s Yvonne Mhango wrote in a note.
Story by : Norvisi Mawunyegah