The World Bank has revised up its forecasts for Egypt’s real GDP growth in 2023 to 4.2 percent from 4 percent, according to the bank’s latest MENA economic update released on Thursday.
On the other hand, the bank downgraded the country’s growth forecast for 2024 to 3.7 percent from 4 percent.
Furthermore, the bank increased its 2024 average inflation forecast for Egypt to 26.7 percent from 18.9 percent.
For 2023, the bank revised its forecast for average inflation up to 26.7 percent from 15 percent.
The World Bank cited increasing interest rates and the devaluation of the currency as the main factors behind the recent changes in growth and inflation forecasts.
Since early 2022, the Central Bank of Egypt (CBE) has raised interest rates by 11 percent.
The CBE set two targets for inflation: seven percent plus or minus two percent on average by the fourth quarter of 2024; and five percent plus or minus two percent on average by the fourth quarter of 2026.
The Egyptian pound has lost nearly 50 percent of its value since February 2022. The US dollar is now traded at about EGP 31, according to the CBE’s data.
Egypt has increased its economic growth rate target for the fiscal year FY2023/2024 to 4.4 percent from the previously targeted 4.1 percent in September, according to Hossam Heiba, CEO of the General Authority for Investment and Free Zones (GAFI).
In April, the International Monetary Fund (IMF) adjusted the country’s GDP growth rate to 3.7 percent in 2023 from its previous estimations of 4.4 percent.
The IMF also downgraded its expectations for the country’s real GDP growth in 2024 to 5 percent from 5.3 percent. The Egyptian inflation rate will maintain its double digits position in both 2023 and 2024.
Egypt is currently under review for the loan agreement with the IMF.
The first review, initially scheduled for 15 March, has not occurred yet.
Expectations for MENA
The World Bank projected MENA’s GDP growth to slow to 3 percent in 2023, down from 5.8 percent in 2022.
Regionally, the bank downgraded forecasts for MENA’s GDP growth to 1.9 percent in 2023 from 3 percent in the previous report.
The bank also revised up the region’s growth forecast for 2024 to 3.5 percent from 3.1 percent.
Source: Ahram Online