IMF downgrades its projections for Egypt’s real GDP growth in 2023

Doaa A. Moneim from Washington DC , Tuesday 11 Apr 2023

The International Monetary Fund (IMF) has revised down Egypt’s expected real GDP growth for the second time since October, according to the World Economic Outlook (WEO) report the fund released on Tuesday.



The IMF now expects the country's GDP growth to reach 3.7 percent in 2023, which is lower than its previous forecasts of 4.4 percent in October and 4 percent in January.

It also downgraded its expectations for the country’s real GDP growth in 2024 to 5 percent, down from 5.3 percent it expected in January.

The IMF’s projections for the country’s GDP growth is below the government target of 4.1 percent set for the FY2023/2024, which starts 1 July.

The spring meetings of the IMF and the World Bank Group (WBG) kicked off Monday in Washington DC under the theme “The Way Forward: Building Resilience and Reshaping Development,” and will run through 16 April.

Egypt’s Minister of International Cooperation and Egypt’s Governor at the WBG Rania Al-Mashat as well as the Governor of the Central Bank of Egypt (CBE) Hassan Abdallah are participating in the meetings.

The World Bank has also revised down last week its forecasts for Egypt’s real GDP growth in the current FY2022/2023, which runs through the end of June, and FY2023/2024 to four percent in each of these two fiscal years, down from 4.5 percent it projected in December of 2022.

For the country’s inflation, the IMF report expects it to maintain its double digits position in both 2023 and 2024, projecting it to slow down to 21.6 percent and to 18 percent, respectively.

Egypt’s inflation kept accelerating in March, reaching over 32 percent, according to readings the Central Agency for Public Mobilisation and Statistics (CAPMAS) released this week.

On the other hand, the country’s core inflation slightly declined in March to 39.5 percent, down from over 40 percent recorded a month earlier, according to readings the Central Bank of Egypt (CBE) also announced this week.

The report expects the unemployment rate to rise in 2023 and 2024 to 7.6 percent and 7.7 percent, respectively, up from 7.3 percent seen in 2022.

“The global economy is yet again at a highly uncertain moment, with the cumulative effects of the past three years of adverse shocks—most notably, the COVID-19 pandemic and Russia’s invasion of Ukraine manifesting in unforeseen ways,” said the WEO report.

It also noted that inflation reached multi-decade highs in 2022 in many economies, leading central banks to tighten their monetary policies aggressively to bring it back toward their targets and keep inflation expectations anchored, driven by the pent-up demand, lingering supply disruptions and commodity price hikes.

Accordingly, the report projected the global GDP growth to drop to 2.8 percent in 2023, down from 3.4 percent recorded in 2022, before rebounding to three percent in 2024.

The report explained that forecast for the coming years is well below what was expected before the onset of the adverse shocks since early 2022.

On a regional level, the report expects the emerging market and developing economies to see a real GDP growth of 3.9 percent in 2023 before rising to 4.2 percent in 2024.

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