Economic growth likely eased further in H1 FY 2024 (July—December 2023) from H2 FY 2023, according to FocusEconomics Consensus Forecast January 2024.
The report stated that the pound traded at EGP 30.80 per USD on 5 January, unchanged month on month. The official exchange rate has been broadly stable since the pound lost roughly 20% of its value against the USD at the beginning of 2023. Recently, the unofficial rate has traded around EGP 54 per USD. The official rate should weaken notably from current levels by the end of CY 2024.
FocusEconomics panelists see the pound ending CY 2024 at EGP 39.37 per USD and ending CY 2025 at EGP 40.75 per USD.
The report said that inflation remained notably above target through November, largely driven by sharp increases in food prices.
However, the non-oil private sector Purchasing Managers’ Index averaged higher in H1 FY 2024, the report added.
It highlighted that the economy is expected to slow further in FY 2024 (July 2023–June 2024) from FY 2023 due to slower growth in private consumption and exports. FocusEconomics panelists see GDP expanding by 3.3% in FY 2024, which is down by 0.2 percentage points from one month ago, and expanding by 4.2% in FY 2025.
The report also noted that inflation slowed to a six-month low of 34.6% in November compared to 35.9% in October, surprising markets to the downside. FocusEconomics panelists forecasted consumer prices rising 24.0% on average in CY 2024, which is up by 0.8 percentage points from one month ago, and rising 11.5% on average in CY 2025.
At its 21 December meeting, the Central Bank of Egypt (CBE) met expectations and held fire once again, leaving the overnight deposit, overnight lending, and main operations rates at 19.25%, 20.25%, and 19.75%, respectively. FocusEconomics projected that the CBE will embark on a loosening cycle in CY 2024.
The next meeting is set for 1 February. FocusEconomics panelists see the overnight deposit rate ending CY 2024 at 17.55% and ending CY 2025 at 13.79%.
