Egypts economy still robust: Goldman Sachs

The report said the Arab republic achieved a “remarkable success” through its economic reform program that was initiated in November 2016.

Egypt's real interest rate at 6.5% and debt instrument proceeds at 6.7% are seen among the most attractive rates on the global level, while other counterpart countries recorded 1% and 0.5%, respectively.

Goldman Sachs said the rates boosted foreign investor appetites while supporting projections of foreign investment inflows.

The report expected that the Central Bank of Egypt (CBE) to balance between the inflation rate limit, previously disclosed in August, and protecting foreign investment inflows.

The CBE left interest rates unchanged for the fourth consecutive time last month despite declining inflation.

Goldman Sachs’ report noted that “although there is room for decreasing key interest rates in Egypt, the expected scenario is that the CBE will put the rates on hold without introducing further cuts for the sake of maintaining demand on debt instrument investments,” according to Ahram Online.

The CBE is reportedly targeting, over the medium term, an interest rate reduction to reach real interest rates level ranging around 2.5%, down from 6.5% at the present time, according to the report.

In case inflation rates would increase by 2%, the CBE would cut interest rates by 2% in return, Goldman Sachs said, expecting the inflation rate to stand at 4.5% during the coming two months.

The report predicted Egypt’s inflation rate to hit 7% or up to 7.5% in the future.

The country’s annual inflation rate is likely to average around 6.2% in the fourth quarter of 2020, the CBE’s Governor Tarek Amer said earlier this month.