Cairo – Mubasher: The Central Bank of Egypt (CBE) is expected to push ahead with monetary policy easing in the next two quarters in an effort to boost the private sector growth, Fitch's BMI research unit said in a report.
BMI Research noted that Egypt’s annual urban inflation is projected to reach 15.2% in 2018 and 12.1% in 2019.
The North African nation has considerable economic fundamentals, which in return boost investment inflows in the short-term, the research firm added.
“Strengthening confidence in the Egyptian economy and still attractive real interest rates are likely to drive a modest appreciation of the pound in the near term,” the report found.
The London-based firm further noted that following 2018, the CBE’s monetary easing policy “is likely to fuel a very gradual depreciation as less attractive real interest rates in an environment of monetary policy normalisation across developed markets weigh on the exchange rate.”
However, higher inflation rate resulting from fuel and electricity subsidy cuts, combining with the rise of global oil prices, are posing the biggest risks to these gains, the report highlighted.
In the same vein, BMI Research expects Egypt’s real gross domestic product (GDP) growth to rise to 4.8% this year, far lower than the government, the International Monetary Fund (IMF) and the World Bank’s forecasts.
The firm also even says that GDP growth of the Arab world's most populous country will decline to 4.7% and 4.3% in 2019 and 2020, respectively.
