BMI Research revised its growth expectations for Egypt to 3.2% for the current fiscal year FY2023/2024 and 4.2% in 2024/2025
In a recent report by BMI Research, a subsidiary of Fitch Solutions, cautious optimism was expressed about the growth prospects of the Egyptian economy in the upcoming fiscal year, expecting stronger growth in investment spending for FY2024/2025.
BMI Research revised its growth expectations for Egypt to 3.2% for the current fiscal year FY2023/2024 and 4.2% in 2024/2025, with modifications made to the structure of economic growth engines based on GDP data for Q2 of the fiscal year.
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The report, seen by the Arab World News Agency (AWP), highlighted key factors expected to drive growth and potential risks that could impact the forecast.
The acceleration of Egypt's economic growth in FY2024/2025 is anticipated to be underpinned by stronger investment spending, balancing a reduced private consumption growth and weaknesses in major export sectors.
The report noted a slowdown in domestic demand attributed to various factors, including high living costs and increased borrowing costs.
Despite this, private consumption growth is expected to be higher than previously thought, driven by declining inflation and increased social spending.
Regarding risks, BMI Research highlighted balanced risks, with potential adjustments to growth expectations based on factors such as the return of normal navigation in the Red Sea.
However, the report also flagged the impact of external events such as the war in Gaza, which could negatively affect Egypt's economy through tourism and investment.
BMI also revealed that the exporting sector will play a significant role in Egypt’s growth, while noting that their contribution is expected to be smaller than previously estimated as attacks by Houthi rebels on ships near the Suez Canal continue to disrupt trade and impact export activities.
The research firm expects ship traffic to return “somewhat” to normal from January 2025, which will provide support for export growth in the second half of FY 2024/2025.
