Egypt's economy to grow 5.3%, 'stable pace' seen

Cairo - Economic reforms being implemented in hopes of bolstering investor confidence

Egypt's economy is expected to grow 5.3 per cent in the fiscal year that ends in June, according to forecasts economists polled by Reuters, the same view found in a survey three months ago.
The economy, with the exception of the oil sector, has struggled to attract foreign investors since the 2011 uprising that unseated Hosni Mubarak.
Egypt's non-oil private-sector activity shrank for a fourth month in December. Private-sector activity has expanded in only five months over the last three years.
"Medium-term growth remains slightly subdued as the government maintains a strong grip on the economy, but is nonetheless supported by an expected expansion in the infrastructure, manufacturing and tourism sectors," said Nadene Johnson, an economist at NKC African Economics.
Hoping to bolster investor confidence, Egypt has been implementing economic reforms as part of a three-year, $12 billion deal agreed with the International Monetary Fund in November 2016. The reforms include VAT, cuts to energy subsidies and a steep currency devaluation.
The median forecast from 14 economists polled from January 8-22 put growth at 5.3 per cent in the current 2018-19 fiscal year and 5.5 per cent the following two fiscal years. Egypt had targeted growth at 5.8 per cent in its 2018-19 fiscal year budget.
"Egypt should enjoy a relatively stable pace of growth over the next couple of years... but the economy will remain strained by ongoing fiscal consolidation, soft private sector activity and uncertainty in the global economy," wrote Maya Senussi, senior economist for the Middle East at Oxford Economics.
"That said, we see greater support from public investment this year, reinforced by lower oil prices lowering subsidy spending. Consumers also stand to gain from lower oil prices, while lower interest rates should generally inject some life into the private sector," she said.
The latest consensus put urban consumer inflation at 15.5 per cent in 2018-19, up from a previous forecast of 14.9 per cent. Economists polled expected the rate to fall to 13.1 per cent in the 2019-20 fiscal year and 10.9 per cent in the 2020-21 fiscal year.
Annual urban consumer price inflation fell to 12 per cent in December from 15.7 per cent in November as monthly food prices dropped. Core inflation, which strips out volatile items such as food, rose to 8.3 per cent from 7.94 per cent.