This ranks Egypt the third — following Saudi Arabia and Iraq — in terms of leading real GDP growth in the Middle East and North Africa (MENA) region in 2022, according to Fitch’s MENA monthly outlook.
Shared with Ahram Online on Sunday, the report attributed the revision largely to a rebound in investments, rising tourist arrivals, and strong private consumption.
Through 2026, Fitch expected Egypt to lead MENA’s real GDP growth to reach close to five percent, followed by the UAE, Israel, and Saudi Arabia.
The report also expected Egypt’s inflation to hit between 6.1 percent and 7.1 percent in 2022, projecting interest rates to reach 10 percent by the end of the year.
Egypt’s annual headline inflation hiked approximately two-fold in January to eight percent, up from January 2021’s 4.8 percent, the Central Agency for Public Mobilisation and Statistics (CAPMAS) reported on Thursday.
Additionally, Egypt’s monthly headline inflation witnessed a slight decline in December, reaching 5.4 percent, down from November’s 5.6 percent and October’s 6.3 percent, according to CAPMAS.
According to these readings, the Monetary Policy Committee (MPC) of the Central Bank of Egypt (CBE) maintained the key interest rates in February at 8.25 percent, 9.25 percent, and 8.75 percent, for the overnight deposit rate, overnight lending rate, and the rate of the main operations, respectively.
Fitch also predicted Egypt’s inflation rate to be the highest in the region through 2026.
For the exchange rate in the Egyptian market, Fitch projected the US dollar to trade at EGP 16.2 by the end of 2022.
On a regional level, Fitch projected six out of eight fast growing economies in MENA will be oil producers, as the OPEC+ supply cuts will allow for higher oil production and expanding capacities will boost gas sales.
Meanwhile, non-oil economies will also grow robustly, buoyed by high vaccination rates and events such as the Expo in Dubai and the FIFA World Cup in Qatar, as well as the reform momentum and spill overs from high oil prices, according to the report.
On the region’s fiscal deficit to GDP ratio, the report said that it will narrow in 2022 to 1.9 percent, down from 3.6 percent, the smallest deficit to be reached in a decade.
“High energy prices and rising hydrocarbon output will increase revenues for oil exporters, while a pick-up in activity will boost revenues for oil importers. Moreover, most governments will pare back pandemic-related expenses to curb overall spending,” the report explained.
In this respect, the report data showed that Egypt is among the countries that are expected to not attain a surplus of its budget.
The report also said that Egypt and Israel will engage in a wave of pro-growth and liberalisation reforms, with agriculture, transportation, telecommunications, and technology becoming the main focus for both.
In a report published in December 2021, Fitch Ratings predicted Egypt to apply for another International Monetary Fund (IMF) programme, particularly if the country was faced with a liquidity shock amid the ongoing challenges caused by the coronavirus and its associated variants.
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