Egypt’s growth to slow down to 4.4% in FY 2022/2023: Fitch Solutions

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Growth of the Egyptian economy is expected to slow down to 4.4% in fiscal year (FY) 2022/2023 due to inflation and slow recovery in both public investment and tourism, according to a recent article published by Fitch Solutions on the economic prospects of North Africa.

Growth is estimated to slow down to 3.6% in the first half (H1) of 2022, Fitch said.

From a regional perspective, Fitch anticipates North Africa’s real GDP growth to decline to 4.6% in 2022 from 5.4% in 2021.

In 2023, Fitch expects the region to achieve a sluggish growth of 3.8%.

“Russia’s invasion of Ukraine has pushed up global food and fuel prices and increased market risk aversion with particularly severe repercussions for the region’s net oil importers, Morocco, Egypt, and Tunisia, weighing on their economic activity as well as on their fiscal and external deficits,” Fitch commented.

Furthermore, the credit rating agency forecasts more inflation for North Africa and double-digit inflation for Egypt.

According to Fitch’s estimates, inflation in the region is expected to average 6.8% in 2023, lower than the 10.1% anticipated in 2022, but still worse than the mild inflation of 4.8% in 2021.

The surge in inflation in the region is the result of higher energy and food prices, which was aggravated by disruptions in supply chains and pressures on currencies, Fitch remarked.

“In Egypt, the impact of higher energy prices will be minimal given the country’s small energy deficit, while the loss of Ukrainian and Russian tourists (one-third of arrivals to Egypt) and higher grain prices will reverse the narrowing of the current account deficit that we had expected this year,” the rating agency said.

On June 12th, Egyptian Minister of Finance Mohamed Maait announced that elevated wheat and oil prices to a record-high, coupled with pressures on the Egyptian pound, is expected to cost Egypt over $10 billion in additional burdens.