Egypt’s economy “will continue to outperform” its regional peers in FY2019-20, Fitch said in its Africa Monitor report for April. While the weighted average GDP growth rate for the MENA region is expected to come in at 1.9% in FY2018-19 and 2.8% in FY19-20, Fitch says it sees Egypt’s GDP growing at a 5.3% and 5.2% clip for the current and next fiscal years. Growth in the near term will be driven mostly by hydrocarbon investments and government infrastructure projects, while exports and non-hydrocarbon investments will grow at a more gradual pace. The report tempers expectations by pointing to “still-elevated” inflation as a downside risk for the economy, which it says “will weigh on private consumption in the near term … slowing the pace of job creating and in turn capping private consumption gains. We forecast these constraints to ease towards the latter part of 2019 and beyond — allowing private consumption to eventually re-emerge as the main contributor to headline growth.”

The report also lauds the Central Bank of Egypt’s recent rate cuts, noting that “cheaper credit is broadly positive for Egypt’s economic growth trajectory, helping to facilitate investment and stimulate job creation and consumption.” Fitch maintains it expects another two 100 bps rate cuts over the course of the year, noting that the downside risks to further monetary easing are “substantial.”