By Patrick Werr
CAIRO (Reuters) – Egypt’s economy will grow by 4.0% in the year to the end of June as IMF measures continue to help improve its economic environment, a Reuters poll showed on Monday.
The median forecast in the Jan. 9-20 poll of 19 economists predicted gross domestic product (GDP) growth would then accelerate to 4.7% in 2025/26 and 5.0% in 2026/27.
GDP growth fell to 2.4% in 2023/24 from 3.8% a year earlier, according to central bank figures, dragged down by a currency crisis and the war in neighbouring Gaza, which has cut into Suez Canal revenue and slowed tourism.
Egypt signed an $8 billion financial reform package deal with the International Monetary Fund in March after securing $24 billion from the United Arab Emirates’ sovereign fund in February for a real estate investment on the Mediterranean coast.
“We are optimistic on the prospects for Egypt’s economy over the next few years,” said James Swanston at Capital Economics, who forecast 5% growth for this year. “Survey data suggest that the weaker pound has started to benefit export-oriented industries via improved external competitiveness.”
In its World Economic Outlook released this week, the IMF estimated the economy of the most populous Arab country would grow by 3.6% this fiscal year and by 4.1% in 2025/26, while the World Bank predicted growth of 3.5% this year and 4.2% the next.
Egypt’s planning ministry has forecast growth of 4.0% in 2024/25.
Monica Malik of Abu Dhabi’s ADCB, which forecast 4.5% growth this year, said a loosening of monetary policy and the resumption of Suez Canal flows would help growth, but that other factors would weigh Egypt down.
“We continue to see a number of challenges to Egypt’s growth outlook, including a tight fiscal policy backdrop and weak investment levels,” Malik said.
The Reuters poll forecast annual headline inflation of 20.4% in 2024/25 and 12.4% in 2025/26.
Inflation has trended downwards from a record high of 38.0% in September 2023, reaching 24.1% in December.
According to the median currency forecast from analysts, the Egyptian pound will weaken to 52.0 per dollar by end-June 2025 and 54.75 by end-June 2026.
Before letting it drop as part of the March 2024 IMF programme, the central bank had kept the pound fixed at 30.85 to the dollar. It now trades around 50.3 to the dollar.
The central bank’s overnight lending rate will decline to 24.00% by the end of June from 28.25% now, and to 17.75% by end-June 2026, according to analyst estimates, a slower rate of decrease than they had predicted in October.
(Other stories from the Reuters global economic poll)
(Polling by Susobhan Sarkar and Anant Chandak; writing by Patrick Werr; editing by Mark Heinrich)
