Egypt economy seen growing as IMF measures run course: Reuters poll
2024.10.24 07:29
By Patrick Werr
CAIRO (Reuters) – Egypt’s economic growth will increase to 4.0% in the year to the end of June 2025 as austerity measures imposed under an International Monetary Fund programme run their course, a Reuters poll showed on Thursday.
The median forecast in the Oct. 9-23 Reuters poll of 13 economists predicted gross domestic product (GDP) growth would then accelerate to 4.7% in 2025/26 and 5.3% by 2026/27.
In 2023/24, GDP growth fell to 2.4% 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.
In February, Egypt sold the rights to develop real estate on its Mediterranean coast to UAE sovereign fund ADQ for $24 billion, paving the way the following month for an $8 billion financial reform package agreement with the International Monetary Fund.
“Economic prospects in Egypt are improving, but at a gradual pace,” said James Swanston at Capital Economics, adding that fiscal policy will remain tight in order to narrow the budget deficit and reduce the debt-to-GDP ratio.
“The benefits of the weaker pound are starting to filter through, but while inflation is slowing it will not be until Q1 2025 when interest rates are cut to provide a boost to households and businesses,” Swanson said.
The poll forecast annual headline inflation of 20.4% in 2024/25 and 11.4% in 2025/26.
Inflation picked up slightly over the last two months to 26.4% in September, though that was well below the record 38.0% hit in September 2023.
The IMF predicted this month in its World Economic Outlook that Egypt’s economy would grow 4.1% in calendar 2025.
According to the median currency forecast from analysts the Egyptian pound will weaken to 50.4 per dollar by end-June 2025 and 52.0 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 48.8 to the dollar.
The central bank’s overnight lending rate will decline to 22.25% by the end of next June and 14.25% by end-June 2026, analysts estimated.
(Other stories from the Reuters global economic poll)
(Polling by Devayani Sathyan and Rahul Trivedi; Writing by Patrick Werr and Hugh Lawson)
