Cairo – May 16, 2024: BMI Research, a subsidiary of Fitch Solutions, revised its forecast for Egypt’s growth in the current and coming fiscal years, displaying cautious optimism as it expects stronger growth in investment spending for FY2024/2025.
In a recent report, the research firm projected Egypt’s growth to hit 3.2 percent for the current fiscal year FY2023/2024 and 4.2 percent in 2024/2025. It also noted that it has made modifications to its forecast according to GDP data from Q2 of the fiscal year.
Seen by the Arab World News Agency (AWP), the report highlighted key factors expected to drive growth and potential risks that could impact the forecast.
The acceleration of Egypt's economic growth in FY2024/2025 is anticipated to be underpinned by stronger investment spending, balancing reduced private consumption growth and weaknesses in major export sectors.
The report noted a slowdown in domestic demand attributed to various factors, including high living costs and increased borrowing costs.
Despite this, private consumption growth is expected to be higher than previously thought, driven by declining inflation and increased social spending.
Regarding risks, BMI Research highlighted balanced risks, with potential adjustments to growth expectations based on factors such as the return of normal navigation in the Red Sea.
However, the report also flagged the impact of external events such as the war in Gaza, which could negatively affect Egypt's economy through tourism and investment.
BMI also revealed that the exporting sector will play a significant role in Egypt’s growth, while noting that their contribution is expected to be smaller than previously estimated as attacks by Houthi rebels on ships near the Suez Canal continue to disrupt trade and impact export activities.
The research firm expects ship traffic to return “somewhat” to normal from January 2025, which will provide support for export growth in the second half of FY2024/2025.
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