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Daniel Richards - MENA Economist
Published Date: 30 January 2020
We have maintained our real GDP growth forecast for Egypt in the current fiscal year 2019/20 (ending June 30) at 5.7%, which would mark a slight acceleration on the 5.6% recorded last year, and potentially the fastest rate of growth since 2007/2008. We also hold to the view that there will be a modest acceleration next year, to 5.9%.
The outlook for Egypt’s fiscal position is positive in the current fiscal year 2019/20 (ending June 30), as the economic reforms implemented over the past several years, combined with stronger real GDP growth, conspire to improve the deficit/GDP ratio from both ends of the equation.
Having widened to -3.7% of GDP last year (from -2.5% in 2017/18), we expect that Egypt’s current account deficit will narrow once again this year, projecting a shortfall equivalent to -2.8% of GDP.
The Central Bank of Egypt surprised by holding its benchmark interest rates steady at its January meeting, leading us to moderate our end-2020 outlook. However, our expectation for continued monetary easing in 2020 remains intact.
The Egyptian pound’s run against the dollar has continued since the start of the year, following its 10% appreciation against the greenback over the course of 2019 – one of the strongest emerging currency performances last year.
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