The bank praised Egypt’s economic recovery in FY2021/2022, pointing out that its 6.6% GDP growth rate was driven by the manufacturing sector
The European Bank for Reconstruction and Development (EBRD) has downgraded its projection for Egypt’s economic growth in 2023, lowering it to 4.3% from 5% in May “amidst reduced government spending [highlighting investments] and lower domestic demand,” with expectations that it will rise back to 5% in 2024.
In its latest Regional Economic Prospects Report, the EBRD explained that Egypt’s implementation of economic reforms – supported by the IMF loan and reform program – and its shift to a durably flexible exchange rate regime will relieve pressure on external financing and accelerate reforms, enabling growth to improve over the medium-term.
The bank praised Egypt’s economic recovery in FY2021/2022, pointing out that its 6.6% GDP growth rate was driven by the manufacturing sector, as well as a rebound in the Suez Canal and tourism revenues.
In Q1 of FY2022/2023, the country’s growth slowed to 4.4%, falling from 9.8% in the first quarter of the previous fiscal year “as a result of the Russia-Ukraine conflict”.
“This slowdown resulted from the impact of the war on Ukraine on commodity prices (Egypt is a major food importer, mostly from Russia and Ukraine), coupled with lower investor sentiment, higher borrowing costs and greater pressure on external accounts,” the report explained.
Related > External debt dropped to $154.98B in Q1 FY2022/2023 | CBE
The report also highlighted the EGP’s almost 50% depreciation against the USD over the past 11 months and the country’s accelerated urban inflation rate which hit a 5-year high of 21.3% year-on-year in December 2022.
In a recent statement, the central bank revealed that the urban inflation rate surged to 25.8% in January 2023.
The average inflation in EBRD regions fell to 16.5% in December, compared to October 2022’s average of 17.5%.
The EBRD’s report downgraded its forecasts for growth in more than half of the 36 economies in which the EBRD operates, with few receiving an upgrade.
Regionally, the report projects the southern and eastern Mediterranean’s growth, which includes Egypt, to see an uptick of 4% in 2023 and 4.2% in 2024.
The report said a more comprehensive Regional Economics Prospects report will be issued in May.
