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Egyptian economy in good shape as FY 2018 ends: FocusEconomics - Daily News Egypt

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Egyptian economy in good shape as FY 2018 ends: FocusEconomics

Egypt’s economy seems in good shape as annual economic growth accelerated in the January-March period to reach a multi-year high. Additionally, in May, foreign reserves hit a record monthly high and, in April, business conditions in the non-oil private sector were in positive territory for only the second time in over two years, according to …


Egypt’s economy seems in good shape as annual economic growth accelerated in the January-March period to reach a multi-year high. Additionally, in May, foreign reserves hit a record monthly high and, in April, business conditions in the non-oil private sector were in positive territory for only the second time in over two years, according to the Middle East & North Africa – June 2018 report published by FocusEconomics.

Moreover, the gas sector also received a boost on 10 May when a third production unit began output at the Zohr gas field. Meanwhile, flotation of part of the state-owned tobacco company on the Egyptian Exchange was announced on 28 May, to raise revenue and invigorate the stock market.

However, the report indicates that apparent social tension following the increase in metro ticket prices underlines the careful balancing act facing President Abdel Fattah Al-Sisi: continuing with-backed structural reforms to the economy, while minimising the burden on Egyptians who are already squeezed financially.

FocusEconomics said it believes that Egypt’s economy will maintain its strength in fiscal year (FY) 2019, backed by an investments boost.

In addition, the report indicates that Egypt’s external sector will continue to benefit from the weaker pound.

However, the high debt burden and the sizeable budget deficit will continue to pose downside risks. FocusEconomics analysts expect GDP to expand 5% in FY 2019, which is unchanged from last month’s forecast, and 5% again in FY 2020. Meanwhile, total investment is forecasted to grow 9.2% in FY 2019, which is unchanged from last month’s forecast, and 9.5% in FY 2020.

In terms of monetary policy, headline inflation continued to decelerate in April, slowing from 13.3% in March to 13.1%. FocusEconomics panellists expect inflation to average 14.1% in calendar year (CY) 2018 and 11.7% in CY 2019.

The report indicates that although the CBE left the key interest rates unchanged in May, international oil prices have risen quickly in recent months, leading to increased inflationary risks for Egypt. Still, headline inflation decelerated to 13.1% in April from 13.3% in March, while core inflation remained unchanged in April at 11.6%.

FocusEconomics forecasted that the overnight deposit rate to be reduced to 15.26% by the end of CY 2018 and 12.45% by the end of CY 2019. Meanwhile, the analysts believe that the Egyptian pound will strengthen by the end of CY 2018 to 17.56 against the dollar, before weakening to EGP 17.80 a dollar by the end of CY 2019.

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https://dailynewsegypt.com/2018/06/07/egyptian-economy-in-good-shape-as-fy-2018-ends-focuseconomics/
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