Fitch Solutions expects Egypt’s GDP to hit 4.2% in FY2023/24
Updated 11/20/2023 10:38:00 AM
Arab Finance: Fitch Solutions expects an uptick in Egypt’s real gross domestic report (GDP) to reach 4.2% during the current financial year (FY) 2023/2024, compared to 3.8% in the elapsed FY 2022/2023, according to its recent Egypt’s country risk report.
The figure will be achieved primarily through foreign investment, making up for declining exports and domestic demand, as well as the limited capacity to further reduce imports.
These factors will cause the currency account deficit to widen from 1.4% of GDP or $4.7 billion in FY2022/23 to 2.6% of GDP or $800 million in FY2023/24, pushing remittance inflows down, as per the report.
The Egyptian pound is expected to stay steady at roughly EGP 31 against US Dollar until early 2024, before weakening to between EGP 40 and EGP 45 to USD by the end of the first quarter (Q1) of 2024, Fitch Solutions added.
It also expects the Central Bank of Egypt (CBE) to keep policy rates on hold until the end of this year, and to raise rates by 300 basis points (bps) during in first half (H1) of 2024.
Moreover, Fitch Solutions anticipates that the fiscal deficit will increase to 7.4% of GDP in FY 2023/2024 from 6.2% of GDP in FY 2022/2023 as a result of higher interest payments, which are a reflection of the rise in government debt yields and increased social spending, keeping the debt near 100% of GDP.
Earlier this month, Fitch Ratings downgraded Egypt’s long-term foreign-currency issuer default rating (IDR) to ‘B-’ from ‘B’, with a stable outlook.
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