NBK expects Egypt’s economic growth to slow in H2 FY2022/23
Updated 5/31/2023 1:21:00 PM
Arab Finance: The National Bank of Kuwait (NBK) expects the Egyptian economic growth to slow over the second half (H2) of fiscal year (FY) 2022/2023 to 3-3.5% according to the Quarterly Economic Brief by the bank’s research department.
The forecast is driven by the ongoing pound weakness, the rise of the parallel market’s exchange rate, high inflation rates, and interest rate hikes.
The NBK said that the country has been under pressure so far this year since economic reforms have paused months after the International Monetary Fund (IMF) approved the $3 billion financing deal in December 2022.
As per the report, the Egyptian pound is managed and fixed at EGP 30.9 per $1, against EGP 38-40 in the parallel market.
Moreover, the bank predicts the balance of payments (BoP) deficit to shrink to $6-7 billion, nearly 2.1% of the gross domestic product (GDP), in FY 2022/2023 from its previous expectations of $11 billion.
Regarding the inflation rate, NBK indicates that it could be within the 29-31% range in the coming months in case no major policies occurred; however, inflation could keep soaring this year if authorities decide to commit to a flexible exchange rate regime.
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