Egypt’s economy could grow at a 3.5% clip this fiscal year, supported by government spending, an expansion in the ICT and energy sectors, and growth in net exports, Deutsche Bank said in a report cited by the local press. Meanwhile, construction and non-oil industries are getting the support they need through the EGP 100 bn stimulus package the government allocated in March, according to the bank.

Positive growth rates underpin Egypt's status as an emerging market darling, the bank said. The pandemic-induced slowdown brought growth to a level lower than the country’s actual capabilities, it added. Egypt is one of just three Middle Eastern and Central Asian economies that will escape contraction this year, the IMF said this week.

On monetary policy, Deutsche Bank isn’t ruling out more easing this year, but expects the Central Bank of Egypt (CBE) to maintain rates when it next meets on 12 November. A hold would come as the CBE already cut rates by 50 bps in its most recent meeting last month, and as a move to preempt global market volatility ahead of the US presidential elections, the bank said. The CBE could see fit to lower interest rates by 50 bps in its final meeting of the year on 24 December, and by a total 150 bps in 2021.

Real interest rates in Egypt are expected to rise to 5.3% next month from a current 4.9% as inflation figures in October are forecast to remain subdued, the bank added. This gives policymakers room to cut rates without driving away carry traders in search of high real returns.