Egypt Economic Outlook country note, November 2023

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Egypt GDP growth will remain just under 4% this fiscal year, but is projected to pick up to 4.8% in FY 2024 and 5.1% in FY 2025. Egypt faces high inflation and balance of payments difficulties, but fiscal support has sustained private consumption, which will gradually gain momentum as inflation moderates. In contrast, business investment has contracted sharply due to tighter financial conditions and increased uncertainty, and is projected to recover only gradually. The authorities should continue to fight inflation by keeping monetary policy tight and restraining public investment projects that are not urgently needed. A reinforced commitment to reducing public debt in the medium term would help restore investor confidence, thereby reducing financing costs and currency depreciation pressures. At the same time, the government should push ahead with its structural reform agenda, including its divestiture programme announced in late 2022, which needs to be clarified further and implemented fully and effectively. The economy has weakened The economy has slowed markedly since early 2022. Initially driven by sharp global food price increases in 2022, inflation has surged and become broad-based, boosted also by successive devaluations of the Egyptian pound. Core inflation stood at 38.1% in October 2023. Household consumption held up thanks to energy price controls and food subsidies as well as a series of fiscal packages. In contrast, private investment has contracted over the past year, as businesses have suffered from tighter financial conditions, currency shortages and increased uncertainty. While domestic demand has slowed, exports have surged, driven by tourism and Suez Canal receipts, and imports were restrained further due to temporarily strengthened restrictions in 2022. Overall, GDP growth is expected to remain largely unchanged at 3.9% in fiscal year 2023.

Egypt

Source: LSEG; and Ministry of Finance, Monthly Finance Report, September 2023 and Budget FY 2023/24. StatLink 2 https://stat.link/j21bes OECD ECONOMIC OUTLOOK, VOLUME 2023 ISSUE 2: PRELIMINARY VERSION © OECD 2023


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Egypt Economic Outlook country note, November 2023 by OECD - Issuu