Latest news with #MohamedAbuBasha
Reuters
2 days ago
- Business
- Reuters
Egypt inflation seen climbing to 14.9% in May
CAIRO, June 3 (Reuters) - Egypt's annual headline inflation is forecast to have heated up in May, driven mainly by an unfavourable base effect, a Reuters poll found. The state statistics agency CAPMAS said it would release inflation figures on Wednesday, six days earlier than usual, due to the Eid al-Adha holiday that begins on Thursday. The median forecast of 12 analysts polled by Reuters was for annual urban consumer inflation to have risen to 14.9% in May from 13.9% in April. The polling data was collected on June 2 and June 3. "We expect headline CPI to accelerate to 15.5% in May from 13.9% in April, primarily due to unfavourable base, and some residual impact from energy price hikes undertaken in mid-April," said Sri Virinchi Kadiyala of Abu Dhabi's ADCB. He expected elevated real interest rates to provide ample room for the central bank to lower rates when it next meets on July 25. The government raised prices on a range of fuel products on April 11 by up to almost 15%, a move long sought by the International Monetary Fund. Egypt has committed to raising fuel prices to cover costs by the end of 2025. Annual inflation has plunged from a record high of 38% in September 2023, helped by an $8 billion financial support package signed with the IMF in March 2024. The falling inflation led the Central Bank of Egypt to cut its overnight lending rate by 225 basis points to 26.0% at its April 17 meeting, and by another 100 basis points on May 22. "The annual figure is likely to show a jump due to unfavorable base effects (nothing more)," wrote EFG Hermes economist Mohamed Abu Basha. "Hence, we do not read this jump as suggesting inflation is changing its deceleration course; it's just a bump before reverting back to the decelerating trend."
Gulf Business
22-05-2025
- Business
- Gulf Business
Turning challenges into catalysts: EFG Hermes' Mohamed Abu Basha on the region's resilient economic trajectory
Image: Supplied At the MENA Capital Market Summit 2025 held in Dubai, Gulf Business sat down with Mohamed Abu Basha, managing director and head of Macroeconomic Analysis at From IMF's revised forecasts to the potential of free trade agreements and the rise of Kuwait as a country to watch, Abu Basha provides a pragmatic and opportunity-driven view of how the Middle East is responding to inflation, diversification, and capital markets development. The IMF recently trimmed the MENA region's growth forecast to a modest 2.6 per cent as global risks mount. How do you interpret this outlook for the region, and what impact might it have on economic policies and strategies moving forward? Well, I honestly see it more as an opportunity for the region. If we look at the last few years, the region has actually benefited from several global shocks — Covid-19, the Russia-Ukraine crisis, Brexit before that, and now instability in the Middle East. So yes, it's another episode of Lower oil prices do pose a challenge and can affect sentiment and growth slightly, especially with concerns around a slowdown in China, which is now more linked to Gulf economies. But relatively speaking, I think the region stands out as one of the more resilient. Tariffs have limited impact, and many economies here have the financial buffers to manage short-term downturns. There's also a reminder here to double down on diversification—investing in and developing capital markets, for instance. Despite current global headwinds, we're seeing multiple IPOs underway, which speaks volumes about demand and the region's financial depth. Governments are also working to build out local and international debt markets to support long-term financing needs. On the monetary policy front, inflation in the region remains low. How do you see monetary policy evolving? A: In this region, monetary policy largely follows the US Federal Reserve due to currency pegs to the US dollar. So any Fed rate cuts would be positive for us, especially as a counter to the drop in oil prices. Lower rates would reduce borrowing costs for the private sector. But there's something to watch out for — the potential weakness of the US dollar. If the dollar weakens, it could lead to imported inflation. For instance, buying from Europe becomes more expensive as the euro strengthens. While I expect this inflation to remain modest, it's worth monitoring, especially in sectors dependent on imports. Overall, I foresee modest, controlled inflation outside of the property sector, where rent inflation is more a reflection of underlying growth. As the global environment softens, we'll likely see moderate inflation and perhaps some Fed rate cuts, which will be welcomed. When we talk about the Gulf, the conversation is often dominated by the UAE and Saudi Arabia. Are there other countries or sectors you believe deserve more attention? Saudi Arabia and the UAE are of course major players, thanks to their size and the depth of their reform and diversification agendas. But Kuwait is also starting to emerge as one to watch. Developments last year — like the long-awaited approval of the public debt law — are positive signals. We're also waiting for additional reforms such as a mortgage law and fiscal measures. On the sectoral front, the story used to be mainly about government spending benefiting real estate and financial services. Now, we're seeing greater diversification. The consumer sector, the full energy value chain (renewables, utilities, downstream), and even non-bank financial institutions are gaining importance. Tourism and hospitality are also booming — long strong in the UAE and now accelerating in Saudi Arabia. Kuwait is making early moves here too. These sectors are definitely promising. How significant are free trade agreements for the region, especially given the global trend towards de-globalisation? These agreements are extremely important for the region. The GCC countries are unique in that they both export capital—thanks to oil revenues — and need to import capital and know-how to support their diversification goals. This dual dynamic makes the region naturally outward-looking. We're seeing stronger ties with Asia — India and China in particular — alongside traditional partners like the US and Europe. Agreements like the GCC-UK free trade pact, when signed, can facilitate greater investment flows and technology transfer, helping accelerate economic diversification. In a world that's increasingly turning inward, these trade deals help the region remain globally integrated and economically competitive.
Reuters
05-03-2025
- Business
- Reuters
Egypt inflation seen plunging to 14.5% in February
CAIRO, March 5 (Reuters) - Egypt's inflation rate is forecast to have tumbled to 14.5% in February, as the exceptionally high price increases of the last two years are no longer reflected in the statistics, according to a poll released on Wednesday. The median forecast of 15 analysts polled by Reuters was for annual urban consumer inflation to have plunged to 14.5% from 24.0% in January. The data was collected from Feb. 27 to March 5. "February is the month where the annual base effect will finally fade away, resulting in a major drop in headline annual inflation," said Mohamed Abu Basha, of EFG Hermes, who predicted inflation would fall to 13.7%. "We do, though, expect an elevated monthly reading due to seasonality associated with Ramadan." Esraa Ahmed of Pharos said the monthly price increase had been exceptionally high in February of last year. Inflation had been trending downwards since it surged to an all-time peak of 38% in September 2023. Price rises have been fuelled in part by rapid growth in the money supply. M2 money supply rose by an all-time high of 32.1% in the year to end-January, central bank data showed. The economy was boosted by a $24 billion real estate investment on the Mediterranean coast by Abu Dhabi in February 2024 and a subsequent $8 billion financial support package signed with the International Monetary Fund signed on March 6, 2024. The government statistics agency CAPMAS is due to release inflation figures on Monday morning. Six of the analysts predicted that core inflation would decrease to 15.4% in February from 22.6% in January.
