Egypt’s total investments will grow 5.5% in fiscal year (FY) 2020/2021 and 10% in FY 2021/2022, according to a FocusEconomics Consensus Forecast for the Middle East and North Africa (MENA).
The report, published this month, highlighted that Egypt’s Purchasing Managers’ Index (PMI), which measures business activity in the non-oil private sector, inched down to 49.4 in August from 49.6 in July.
The figure ended three consecutive months of increasing readings, following April’s nadir of 29.7, which remains the lowest point on record since the current survey began in April 2011. It also reflected the effects of Egypt’s first full month with strict restrictions to combat the novel coronavirus (COVID-19) pandemic. Readings below 50 indicate an overall decrease compared to the previous month.
FocusEconomics projects that Egypt’s GDP will see growth of 2.6% in FY 2020/2021, up 0.1 percentage points from last month’s forecast. In FY 2021/2022, panellists expect growth of 5.4%.
The report said that inflation dropped to 4.2% in July from 5.6% in June, as food and housing price pressures eased. Over the course of 2020, inflation is expected to average significantly lower than in the previous year, as weak aggregate demand and lower oil prices weigh on consumer prices. However, lower electricity subsidies from July and reduced interest rates should keep price pressures relatively high nonetheless.
Panellists saw inflation averaging 5.8% in current year (CY) 2020, reflecting a downturn of 0.1 percentage points from last month’s forecast, and 7.1% in CY 2021.
“At its meeting on 13 August, the Central Bank of Egypt (CBE) kept the overnight deposit, overnight lending and main operation rates unchanged at 9.25%, 10.25% and 9.75%, respectively,” the report read, “The next monetary policy meeting is scheduled for 24 September. Interest rates are seen as remaining close to current levels going forward, as the CBE aims to bolster economic growth and inflation.”
FocusEconomics also projects that Egypt’s overnight deposit rate will end CY 2020 at 9.25%, and at 9.04% in CY 2021.