AfDB highlights Egypt’s easing inflation, lowers avg. inflation rate forecast for next FY

Egypt’s average inflation rate for the coming fiscal year is expected to hit 14 percent, according to the African Economic Outlook 2023 revealed during the African Development Bank Group’s (AfDB) annual meetings.

This is lower than the previously forecasted 20 percent, with AfDB pointing to “high food and nonfood prices and the devaluation of the Egyptian pound against the US dollar."

Egypt’s GDP is expected to grow to 4.8 percent in FY2023/2024, slightly higher than the previously forecasted 4.4 percent for the current fiscal year.

In terms of the continent, AfDB expects inflation to ease in most African countries in 2024 due to tight monetary policies, noting that Egypt attributed the most to the North African region’s raised average inflation rate.

AfDB also highlighted Egypt’s deaccelerating inflation, with its annual headline inflation rate dropping to 31.5 percent in April, its first decline in 10 months.

The development bank projects Egypt's current account deficit to reach 3 percent in FY2023/24, setting its expected budget deficit at 5.4 percent for the same period, the report explained.

The budget deficit is expected to climb to 6.9 percent of Egypt’s GDP for the coming FY, compared to a previous estimate of 6.3 percent, it wrote.

For FY2022/2023, the AfDB estimated the budget deficit and current account deficit at 6 percent and 3.5 percent, respectively.