Egypt economy seen growing 2.9% in year to June, 5.0% in 2021/22: Reuters poll

The 2020/21 figure is slightly higher than the 2.8% forecast by both Finance Minister Mohamed Maait on April 5

  
Image used for illustrative purpose. City skyline Cairo at dusk, A cityscape of the downtown area of Cairo, capital city of Egypt.

Image used for illustrative purpose. City skyline Cairo at dusk, A cityscape of the downtown area of Cairo, capital city of Egypt.

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CAIRO - Egypt's economy will grow by 2.9% in the fiscal year that ends in June and will accelerate to 5.0% in the following year as the coronavirus pandemic recedes and tourists return, a Reuters poll of 23 economists showed on Thursday.

The 2020/21 figure is slightly higher than the 2.8% forecast by both Finance Minister Mohamed Maait on April 5 and economists in a Reuters poll three months ago.  

April's consensus was significantly lower than the almost 6% growth projected before the coronavirus pandemic broke out.

"We expect slashed tourism to be the main drag on the economy in FY20/21, which will suppress both private consumption and investments," said Garbis Iradian of the Institute of International Finance (IIF).

COVID-related travel restrictions caused revenue from tourism to plummet to $1.8 billion in the second half of 2020 from $7.2 billion a year earlier, central bank data showed.

Government investment is set to be the main growth driver this year, said Iradian, IIF chief economist for the Middle East and North Africa.

"We expect it to recede next year while private investment picks up following a recovery in tourism with a positive spillover effect on private consumption," he added.

Economists predicted in the April 8-20 poll that economic growth would further rebound to 5.5% in 2022/23.

INFLATION

The economists polled by Reuters expected annual urban consumer price inflation to decline to 4.8% in 2020/21, slower than the 5.6% they had predicted three months earlier. They expected inflation would pick up to 6.4% in 2021/22 and then slow to 6.2% in 2022/23.

Egypt reported annual inflation of 4.5% in March, higher than the 3.4% reported in August, when it approached its lowest level in 14 years.

"We expect inflation to normalise around a long-term average of 9%," said HC Securities analyst Monette Doss, with prices pushed up by international oil prices and pressure from the expected rise in tourism and consumption demand.

The currency will weaken to 15.90 Egyptian pounds per dollar by the end of 2021, to 16.20 by the end of 2022 and to 16.74 by the end of 2023, the poll showed.

Egypt's central bank is expected to lower its overnight lending rate to 9.00% by the end of June 2021 from the current 9.25%, then further reduce it to 8.25% for both 2022 and 2023, the poll found.

(Reporting by Patrick Werr; Polling by Md Manzer Hussain and Shaloo Shrivastava in Bengaluru; Editing by Gareth Jones) ((patrick.werr@thomsonreuters.com;))

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