In its MENA economic outlook update, Fitch noted that it will keep its expectations for the country’s inflation rate at 13.2%
Fitch has raised its projections for Egypt’s 2022 real GDP growth for the fourth month in a row, upping it to 6.59% from its previous prediction of 6.23% announced in September.
In its MENA economic outlook update, Fitch noted that it will keep its expectations for the country’s inflation rate at 13.2% through end of 2022 for the third consecutive month.
Egypt’s annual headline inflation rose to 15.3% in September, with urban consumer inflation hitting its highest recording since November 2018’s 15.7%, driven by global economic happenings.
Fitch forecasted that the EGP will continue to weaken against the USD, expecting it to close the year around EGP 21 vs the USD.
“We expect that depreciatory pressures on the majority of MENA currencies, that are not pegged to the US dollar, will persist in the next three to six months. Aside from country specific factors, stronger for longer US dollar will be the main source of downward pressure on the currencies in the region,” explained Fitch in its report.
Related > World Bank revises Egypt’s economic forecast to 4.8% for FY2022/2023
“Our America’s team expects the US dollar Index (DXY) will continue to appreciate, likely peaking over Q4 2022 and Q1 2023, driven by a hawkish US Fed and rising risk aversion. This will weigh on the Egyptian pound and exacerbate domestic pressures,” added the report.
The EGP is currently trading at its lowest level against the USD since November 2016, during the IMF-backed economic reform program’s implementation.
Egypt is in talks for a fresh loan to support the country during economic difficulties resulting from the Russia/Ukraine conflict and ongoing COVID repercussions. Egypt and the IMF are set to meet on Saturday after an announcement by the IMF stating that both parties have “agreed to finalize their work to reach a staff-level agreement very soon.”
