World Bank revises downward its Egypt economic growth forecast: The World Bank now expects Egypt’s economy to grow at a 4.0% clip during the fiscal year 2022-2023, according to its April MENA Economic Update (pdf). The forecast marks a downward revision from its October forecast of 4.8% and roughly tallies with the government’s latest estimates.

We’re still expected to be among the top performers in the MENA region: Only Djibouti is expected to see higher growth among regional oil importers in 2023, at 4.4%. Egypt is also forecast to outperform all oil exporters bar Oman, as weakening global oil demand sees GDP growth in the GCC moderate from 7.3% in 2022 to 3.2% this year.

Blame inflation: The downgrade comes thanks to a toxic soup of factors familiar to our regular readers. Household and business purchasing power are being constrained as a result of the devaluation of the EGP, imported inflation, higher fuel prices, and monetary tightening, the bank writes (pdf). “Inflation is eroding incomes and constraining business activity,” it says. The lender is predicting inflation to average 18.9% in FY 2022-2023 before moderating to 15.0% next fiscal year and 10.0% in FY 2024-2025.

REMEMBER- Analysts are predicting another month of record inflation when March data is released tomorrow, after price hikes hit a five-and-a-half year high of 31.9% y-o-y in February.

Driving growth: The services sector — mainly tourism and Suez Canal receipts — as well as construction, the WB says. GDP growth is forecast to remain steady at 4.0% next fiscal year before improving to 4.7% in FY 2024-2025.

The depreciation may have a silver lining: “Relative to other developing oil importers in MENA, Egypt’s forecast reflects the expectation that its competitiveness might be increased due to the recent depreciation of the EGP,” the World Bank says. “Reforms to boost investment, exports, and FDI remain crucial for competitiveness,” it adds.

The World Bank is now expecting the MENA region to grow at a 3.0% clip during 2023, down 0.5 percentage points from its previous forecast. Oil exporters will see the biggest deceleration in growth as last year’s hot energy markets on the back of the war in Ukraine give way to a more uncertain global outlook, though the historical growth gap between oil exporters and importers in MENA is expected to persist.

Sounding the alarm on food insecurity: The April update has a special focus on what the World Bank says is “a full-blown food insecurity crisis brewing across the region,” largely thanks to inflationary pressures. Food insecurity in MENA now affects some 17.6% of the population, it writes, up from 11.8% in 2006. “Inflation hits the poor much harder than the rich, because the poor spend most of their budget on food and energy,” it says — and data suggests the difference in impact is higher in Egypt than any other country in MENA. Egypt will need some USD 2.8-4.2 bn to meet the needs of the “severely food insecure” in 2023, the report reads.

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