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The European Bank for Reconstruction and Development (EBRD) has cut its Egyp t growth forecast for 2024 by 0.7 percentage points to 4.5%, it said in its latest Regional Economic Prospects report (pdf). The bank cites “structural constraints in non-resource sectors, high inflation and limited fiscal space” as contributing factors to the country’s economic slowdown. The EBRD’s 2023 growth forecast for Egypt saw a slight 0.1 percentage-point increase to 4.3% in its last forecast in May.
The bad outweighs the good: The bank points to thedeceleration in construction and manufacturing activities and the contraction in natural gas output — which reached a three-year low during the first half of the year — as big obstacles to GDP growth. “Foreign exchange reserves stabilized, partly thanks to an IMF-supported program that improved access to finance, but the currency remains under pressure and a significant differential remains between the official and black-market exchange rates,” the report said.
It’s not just the EBRD: Over the summer, the IMF revised its 2024 growth forecast for Egypt to 4.1%, down from its 5.0% forecast a few months prior, citing the lack of exchange-rate flexibility and the FX crunch. Morgan Stanley also recently lowered its FY 2023-2024 growth forecast to 4.2%, from 5.0%.
Fiscal year growth forecast unchanged: The EBRD maintained its growth forecast for the current fiscal year at 4.8%, picking up from FY 2022-2023’s growth of 4.1%.
This is higher than government forecasts: Projections in the government’s new budget see economic growth slowing to 4.1% in the current fiscal year, from 4.2% the year prior.
The slowdown dragged down the region’s outlook: The SEMED region — which spans developing countries in the southern and eastern Mediterranean, emerging Europe, and central Asia — is now looking at 3.9% growth for 2024, down 0.5 percentage points from previous forecasts, triggered by the slowdown in Egypt and Morocco. The multilateral lender cut its growth for Morocco by 0.2 percentage points to 3.0%.
