Egypt Today: Fitch Solutions predicts that Egypt will maintain a steady economic growth of 4.2 percent in the current fiscal year, attributing it to increased investment, a rebound in the manufacturing sector, and the expected resolution of the Gaza conflict by late 2024.
In a LinkedIn post, Fitch Solution’s Head of MENA Country Risk, Ramona Moubarak, explained “We maintain our view that economic growth will pick up to 4.2 percent in FY2024/2025, driven by higher investment, a recovery in the manufacturing sector and a normalization of traffic through the Suez Canal (assuming the war in Gaza ends in H2 2024). The hydrocarbons sector and the elevated cost of living will prevent a stronger rebound in economic growth.”
Moubarak highlighted that remittance flows from Egyptians working abroad surged to $7.5 billion in Q4 FY2023/2024.
Egypt’s tourism sector demonstrated resilience amid increasing geopolitical risks, she added, further supporting economic stability.
In Fitch’s recent report, the agency projected that Egypt’s inflation would remain high in the latter half of 2024, averaging around 27 percent annually due to a weakened exchange rate and increases in managed prices like electricity and fuel.
As a result, Fitch anticipated that the Central Bank of Egypt (CBE) would maintain a strict monetary policy throughout 2024.
Inflation was expected to decline to under 20 percent by February 2025, potentially allowing the CBE to start easing monetary policy either before February 2025 or immediately after. Fitch projected the CBE to cut rates by 1,200 basis points later that year, in line with global easing trends.
Fitch also forecasted a reduction in Egypt’s current account deficit to 4.2 percent of GDP, or $13.2 billion, in FY2024/2025, citing increased remittances and a growing services surplus.
Foreign exchange reserves, which had reached a record $46.5 billion in July 2024, were projected to continue rising.
The exchange rate is expected to trend downward, ranging between LE 47.9 - 49.5 against the USD for the rest of the year, with the ongoing war in Gaza projected to add pressure on the pound and limit its recovery.
Looking ahead, Fitch expected the LE to depreciate by 7 percent against the USD, with inflation declining to an average of 18.1 percent the following year.
Fitch expects the Egyptian pound to hit around LE 57.63 against the USD by 2033.
https://www.egypttoday.com/Article/3/134534/Fitch-sees-steady-economic-growth-for-current-FY-maintains-growth