The Arab Monetary Fund (AMF) expects the Egyptian economy to achieve a growth of 5.5% in FY2022/23, compared to the 6.2% expected for FY2021/2022.
The fund indicated in its newly issued Arab Economic Outlook 2022 Report that the Egyptian economy achieved a growth of 3.3% during FY2020/21 as a result of the recovery of the tourism sector, the revenues of which grew during the first half (1H) five-fold from the same period of the previous FY to achieve about $5bn.
The report added that the oil balance also achieved a surplus of $2.1bn, in addition to the growth of the non-oil exports sector by about 38%, pointing out that one of the most important factors supporting recovery is the Egyptian government programme to support exporters and the speed and flexibility of the economic policies — whether monetary or financial — that were recently implemented.
Furthermore, it pointed out that the Egyptian government announced its intention to increase the participation of the private sector in the Egyptian economy and to increase the injection of foreign direct investments into the local economy by strengthening the role of the national private sector and supporting and localising national industries to rely on local products.
This is in addition to announcing a programme for offering state-owned assets to the private sector valued at $10bn annually for a period of four years and a clear and binding plan to reduce the public debt as a percentage of national income as well as the budget deficit over the next four years, and to provide an integrated vision to revitalise and strengthen the Egyptian Exchange (EGX), including offering stakes in salinity companies of the Egyptian Armed Forces.
The report added that based on the state’s vision to encourage the private sector, the Egyptian government has developed an integrated policy for the state’s ownership of assets and exit proposals across all sectors so that there is a logic behind the state’s presence in economic activity based on successful international experiences and lessons learned from global crises, pointing out that the State Ownership Policy Document clarifies a number of economic sectors that will be completely exited from and others that will witness an increase in private investment or a decrease in government investments.
In other news, the fund expects Egypt to record an inflation rate of 8.5% this year and 7.2% in 2023.
Moreover, it fund said that it is expected that the general level of prices in Egypt in FY2022/23 will be affected by a number of factors, most notably the monetary policy of the Central Bank of Egypt (CBE) and the extent to which it will continue to raise interest rates to control inflation and maintain the 7% target, in addition to fluctuations in supply chains globally, which will affect the prices of food commodities — especially wheat — in addition to the continued rise in the prices of energy and food commodities.
Finally, it indicated that Egypt recorded an inflation rate of 13.5% in May, which is the highest level it recorded over the past four years, and it is expected that prices will continue to rise, however, at a slower pace over the coming period, with the CBE continuing to narrow monetary policy to reach its 7% (+/-2%) inflation target.
