Standard Chartered holds GDP forecast at 4.5% for FY 2025-26

Standard Chartered has kept its GDP growth forecast for Egypt at 4.5% for the current fiscal year, amid global economic shifts in the US, China, and the euro zone that saw it reduce its global growth forecast 0.1 percentage points to 3.1%, the bank said in a statement (pdf). This was attributed to the country’s strong economic outlook on the back of a “sustained microeconomic stability”.

The lender’s growth forecasts are just below a recent Reuters poll that saw GDP accelerating to 4.6% this fiscal year, and a fair bit below the CBE’s 4.8% forecast. However, Standard Chartered’s predictions are way ahead of the IMF’s forecast of 4.1% and the World Bank’s outlook of 3.8%.

The bank also sees foreign investment pledges as having given the EGP a shot in the arm, pointing to recent growing confidence in the EGP as being boosted by the significant investment pledges from Qatar and Kuwait, totaling USD 12.5 bn with a 50% disbursement target by year-end. The lender also highlighted the continued attractiveness for our carry trade despite recent interest rate cuts, which it says is supported by a confidence in being able to repatriate funds outside the country.

Standard Chartered sees the current account deficit narrowing on the back of a more than 60% y-o-y jump in March remittances and a rebound in exports, putting our economy on “a promising path,” Standard Chartered CEO Mohammed Gad noted. Recent data also showed that remittances from Egyptians abroad climbed 24.2% y-o-y in May to reach about USD 3.4 bn, marking 15 consecutive months of y-o-y remittance growth.

The bank projects the Central Bank of Egypt to proceed with cautious interest rate cuts, ending the year with a policy rate of 19.25%. This measured approach is expected despite inflation remaining within the 13-17% range.

The coming period will also likely see the International Monetary Fund shift its focus towards structural reforms, advocating for tighter fiscal policies and increased privatization efforts. These reforms are set to complement Egypt’s investment inflows, laying the groundwork for sustainable growth,” according to the statement.