POLL-Egypt's economy seen slowing in 2020/21
By Patrick Werr
CAIRO, Oct 27 (Reuters) - Egypt's economy will grow by a subdued 3.3% in the fiscal year that began in July, a Reuters poll of 20 economists showed on Tuesday, down from the 5.9% the government had been aiming for before the coronavirus pandemic hit earlier this year.
The pandemic caused tourism to collapse since March and other parts of the economy to slow but the growth forecast is slightly improved on the 3.1% figure predicted in a poll three months ago.
"Our assumptions for 2020/21 are based on expected circa 50% year-on-year slash in tourism revenue with a negative impact on employment levels, which could also lead to muted real growth in household consumption," said HC Securities analyst Monette Doss.
The Oct. 15-25 poll predicted growth would recover to 5.0% in 2021/22 and 5.5% in 2022/23.
In the last few months the government has secured at least $17 billion in external financing to plug a balance of payments gap caused by the collapse in tourism, including nearly $8 billion from the International Monetary Fund.
The economists polled by Reuters expected annual urban consumer price inflation to slow to 5.8% in 2020/21 before gathering pace again to 7.0% in each of 2021/22 and 2022/23.
Annual inflation came in at 3.7% in September and 3.4% in August, near its lowest levels in 14 years.
"We expect inflation to trend higher over the medium term as the exchange rate weakens and global commodity prices tick higher amid a recovery in global demand," said Callee Davis, an economist at NKC African Economics.
The currency will weaken to 15.8 Egyptian pounds to the dollar by end-December from its current rate of about 15.65, the economists forecast. It will further weaken to 16.5 by December 2021 and 17.0 by December 2022.
Economists predicted the central bank's overnight lending rate would slide to 9.25% by end-June 2021 from the current 9.75%, then again to 8.50% by June 2022 and 8.00% by June 2023.
Egypt's economy grew 3.5% in the fiscal year that ended on June 30, Planning Minister Hala al-Saeed said last month.
(Reporting by Patrick Werr in Cairo Polling by Md Manzer Hussain and Shaloo Shrivastava in Bengaluru Editing by Matthew Lewis)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.