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Egypt Today
27-04-2025
- Business
- Egypt Today
Reuters poll reveals regional economists' predictions for Egyptian economic growth
Cairo – April 27, 2025: Economists have lowered their growth projections for Egypt's economy in the coming years, citing factors such as tariffs imposed by the United States and expectations of a slowdown in global economic growth, according to a Reuters poll. The poll, conducted between April 9 and 23, surveyed 17 economists, who now predict Egypt's GDP will expand by 3.8 percent in the current fiscal year (FY2024/2025), down from the 4.0 percent forecast made in January. Growth is also expected to ease slightly in FY2025/2026, with a 4.6 percent expansion predicted, down from the previous 4.7 percent forecast. Sri Virinchi Kadiyala of Abu Dhabi's ADCB noted that the main impact of escalating trade tensions on Egypt is felt indirectly, through diminishing business and investor confidence. On the other hand, Ivan Burgara of the Institute of International Finance (IIF) argued that Egypt is somewhat insulated from U.S. tariffs, owing to a trade surplus with the U.S. and the relatively small volume of trade between the two countries. The more significant risk, he suggested, stems from the broader impact of slower global growth, particularly in Europe. The Reuters poll also projected Egypt's headline inflation to average 20.48 percent in FY2024/2025, with a further decrease to 12.2 percent expected in FY2025/2026. Despite a drop in growth to 2.4 percent in FY2023/2024—down from 3.8 percent the previous year, largely due to the currency crisis, the Gaza conflict, and reduced Suez Canal revenues—there are signs of recovery. The Egyptian economy regained momentum following an $8 billion financial reform deal with the International Monetary Fund (IMF) and a $24 billion investment agreement with the UAE's sovereign wealth fund for Mediterranean real estate projects. Preliminary data from Egypt's central bank suggested the economy continued to improve in the first quarter of 2025, exceeding the 4.3 percent growth rate recorded in the previous quarter. However, inflation remains a challenge, with headline inflation accelerating to 13.6 percent in March from 12.8 percent in February, following a steady decline from a peak of 38.0 percent in September 2023. Currency forecasts indicate that the Egyptian pound will weaken further, with analysts predicting it will fall to 51.87 per dollar by the end of June 2025, and to 53.10 by June 2026. Since the central bank allowed the pound to depreciate as part of the March 2024 IMF program, the currency has traded around 51.0 per dollar, a significant drop from its previous fixed rate of 30.85 to the dollar. Additionally, the central bank's overnight lending rate is expected to decrease to 24.25 percent by the end of June, down from the current 26.0 percent, with further cuts anticipated, bringing it to 17.75 percent by June 2026. This would mark the first rate reduction in nearly five years.
Reuters
23-04-2025
- Business
- Reuters
Economists trim Egypt's economic growth forecast on tariff concerns: Reuters poll
CAIRO, April 23 (Reuters) - Economists have trimmed forecasts for Egyptian economic growth this year and next, in part due to tariffs imposed by the United States and expectations of slower global growth, a Reuters poll showed on Wednesday. The median forecast in the April 9-23 poll of 17 economists was for gross domestic product (GDP) to grow 3.8% in the current fiscal year that ends on June 30, down from 4.0% predicted in a similar poll in January. GDP is expected to expand 4.6% in the 2025/26 fiscal year, down from 4.7% predicted in January. "The impact of escalating trade tensions on Egypt are mostly felt through indirect channels, i.e., through negatively impacting business and investor sentiment," said Sri Virinchi Kadiyala of Abu Dhabi's ADCB, adding that large external debts also weighed on Egypt. Ivan Burgara of the Institute of International Finance, or IIF, said Egypt was relatively sheltered from U.S. tariffs. "It has a trade surplus with the U.S., and overall trade between the two countries is small. The main shock would come via the secondary impact on global growth, particularly in Europe," he said. The Reuters poll forecast annual headline inflation of 20.48% in 2024/25 and 12.2% in 2025/26. Egypt's growth fell to 2.4% in 2023/24 from 3.8% a year earlier, according to central bank figures, dragged down by a currency crisis and the war in neighbouring Gaza, which cut into Suez Canal revenue and slowed tourism. It regained momentum after Egypt signed an expanded, $8 billion financial reform package with the International Monetary Fund and secured $24 billion from the United Arab Emirates' sovereign fund for real estate investment on the Mediterranean coast. The central bank this month said preliminary indicators suggested the economy continued to recover in the January-March quarter, exceeding the 4.3% recorded in October-December 2024. Headline inflation, which has trended downwards from a record high of 38.0% in September 2023, accelerated to 13.6% in March from 12.8% in February. According to the median currency forecast from analysts, the Egyptian pound will weaken to 51.87 per dollar by end-June 2025, and 53.10 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 51.0 to the dollar. The central bank's overnight lending rate will decline to 24.25% by the end of June from 26.0% now, and to 17.75% by end-June 2026, according to analyst estimates. The bank cut its rates this month for the first time in nearly five years.
