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Monday, 22 October 2018

Fitch’s BMI Research revises Egypt GDP to 5.4% from 5% for 2018/19

Fitch Group’s BMI Research has revised its forecast for real GDP growth in Egypt for FY2018-19 to 5.4% from its earlier estimate of 5%, citing the country’s surging natural gas sector, the firm said in its November 2018 North Africa report. It also raised its forecast for the following year to 5.6% from 5.4%. “This comes on the back of stronger-than-anticipated growth of 5.3% in FY 2017-18, primarily boosted by increases in net exports and investment — a trend that we expect will remain in place over the quarters ahead,” the report said.

Thank the gas fields: The firm’s energy team expected production of the supergiant Zohr field to reach maximum capacity in the coming two years. Along with other finds, it will see Egypt with surplus gas by 2019. The report also cited the recovery of tourism as a plus.

Inflation and rates: BMI expects inflation to remain high on the back of further fuel subsidy cuts (with the resultant pressure on vulnerable socioeconomic groups) and for interest rates to also remain high, placing constraints on loan growth. It revised its forecast for the CBE rates, expecting the year to end with overnight lending and deposit rates of 16.75% and 15.75% respectively from 15.75% and 14.75% previously. It expected one last cut to take place later this year.

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