HSBC gave an optimistic outlook for Egypt's economy (Reuters)
HSBC is “fundamentally” optimistic on Egypt’s near-term outlook, the bank's Chief Economist for Central & Eastern Europe, Middle East and Africa Simon Williams said at an HSBC Economist Roadshow event in Cairo, according to a recent press release.
Williams called the gains from Egypt's economic reform programme “impressive,” adding that his bank believes they have momentum.
Such gains “will, in our view, see the domestic and external imbalances that had become so damaging to economic function continue to narrow over the remainder of this year and into 2019,” the HSBC economist said.
Egypt has been implementing an economic reform programme, supported by a $12 billion IMF Extended Fund Facility agreement signed in November 2016.
The IMF and the Egyptian government reached a staff-level agreement last week on the third review of the programme.
If the agreement receives approval from the IMF’s executive board, Egypt will receive $2 billion, bringing total disbursements to $8 billion under the loan agreement.
Williams said he expects that with easing inflation and renewed confidence in the economy, growth will “trend upward,” driven by higher consumption, investment and export.
Annual headline inflation fell from a peak of from 33 percent in July 2017 to around 13 percent in April 2018.
“We expect the recovery process to benefit from the tailwinds of a steady, but extended, monetary easing cycle and strong global risk appetite which should ensure Egypt continues to benefit from capital inflows,” Williams said.
“The higher rate of growth will not only boost real incomes and enhance support for the reform process underway, but also help drive down nominal imbalances as a proportion of national income,” he added.
The HSBC Economist Roadshow is an annual event in which HSBC economists travel around the Middle East, North Africa and Turkey to give updates on their outlook for the region’s economies.
HSBC has been operating in Egypt for almost 36 years.