EBRD downgrades forecasts for Egypt’s growth by 1% in FY2022/23

The EBRD also revised Egypt’s output growth down by one percent compared to September projections, according to the report, while expected growth for 2023 to reach 4.6 percent amid reduced government spending (especially in investment) and lower domestic demand.

Highlighting Egypt’s economic scene, the report explained that the country’s economy recovered strongly from the COVID-19 pandemic in FY2021/2022.

The report cited Egypt’s real GDP growth rate that doubled to 6.6 percent in FY2021/2022, driven by the manufacturing sector, along with a rebound in the Suez Canal and tourism revenues.

However, Egypt’s growth slowed down to 4.4 percent in the first quarter of FY2022/2023, down from 9.8 percent in the corresponding period of the previous year, as a result of the Russia-Ukraine conflict, said the report.

“This slowdown resulted from the impact of the war on Ukraine on commodity prices (Egypt is a major food importer, mostly from Russia and Ukraine), coupled with lower investor sentiment, higher borrowing costs and greater pressure on external accounts,” the report explained.

It added that the Egyptian pound also depreciated by close to 50 percent against the US dollar since early March and inflation accelerated to a five-year high of 21.3 percent (Y-o-Y) in December 2022.