AfDB expects Egypt's GDP growth at 4.8 percent for FY 2023/24: Report

Muhammed Khalid , Thursday 25 May 2023

Egypt's GDP growth is expected to increase to 4.8 percent in FY 2023/24, up from 4.4 percent in the current FY, according to the African Economic Outlook 2023.

Cairo The Capital Of Egypt. AFP


The government's IPO programme, estimated at $40 billion, is set to enable the private sector to grow, the report said.

However, the report warns that Egypt's reliance on large external financing is still constituting a substantial risk.

Last month, the IMF and the World Bank (WB) lowered their outlook for Egypt's growth whether for this FY or the upcoming one that will start in July.

The IMF revised its growth expectations to 3.7 percent from 4.4 for 2023, and to 5 percent from 5.3 for 2024.

The WB downgraded its forecasts for Egypt’s real GDP growth in FY 2022/23 and FY 2023/24 to 4 percent each of these two FYs, down from the 4.5 percent it projected in December of 2022.

Noteworthy, the Egyptian government targets a 4.1 percent growth rate for FY 2023/24.

Inflation downgraded

The AfDB report estimates Egypt's average inflation for the next FY at 14 percent, down from 20 percent for the full FY 2022/23, "as a result of high food and nonfood prices and the devaluation of the Egyptian pound against the US dollar."

The report states that Egypt accounts for most of the increase in the average inflation for the north African region.

However, the report expects inflation to ease in most African countries in 2024 due to the impact of tight monetary policies.

Egypt's annual headline inflation dropped to 31.5 percent in April, down from 33.9 percent in March, recording the first monthly deceleration in 10 months, but a leap from 14.9 percent in April 2022.

The Egyptian pound has nearly lost 100 percent of its value in a year and it is now trading at about EGP 31 against the USD. To rein in inflation, the Central Bank of Egypt raised interest rates by around 9 percent since March 2022.

Current account & budget deficits 

The report forecasts Egypt's current account deficit to reach 3 percent in FY 2023/24, setting its expected budget deficit at 5.4 percent for the same period.

Egypt’s government has increased its budget deficit estimate to 6.9 percent of the GDP for FY 2023/24 compared to an earlier estimate of 6.3 percent.

For the current FY, the report estimates the budget deficit and current account deficit at 6 percent and 3.5 percent, respectively.

According to the draft of Egypt's general budget for FY 2023/24, the deficit is expected to reach EGP 848.8 billion ($27.4 billion), up from EGP 718 billion ($23.2 billion) in FY 2022/23.

Moreover, the current account deficit fell by 77.2 percent to around $1.8 billion during the H1 of the current FY, compared to about $7.8 billion in the corresponding period a year earlier.

More private sector involvement in climate efforts

"The financing needed for Egypt to adequately respond to climate change is an estimated $19.75 billion a year," the AfDB report says.

The report highlights that the Egyptian private sector is facing some obstacles hindering its full participation in the country's climate change efforts, including, "lack of technical knowledge, limited access to funds, unclear laws and regulations, and a weak case for adaptation."

Nevertheless, the report sees a silver lining in the situation, citing promising "strategic opportunities" in Egypt, namely, creating a carbon market, issuing green bonds, establishing 15 new green cities, and implementing the Integrated Sustainable Energy Strategy.

"Egypt’s natural capital could be a source of climate actions and green growth financing, with important involvement of the private sector," the report maintains.


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