Cairo - Mubasher: Capital Economics, stated in a recent report, that it expects Egypt’s economy to improve in 2016 following a slump this year, but the pace of the recovery will be limited by weakness in the tourism sector.
Capital Economics sees that the Central Bank of Egypt (CBE) will move towards devaluing the pound, perhaps within the next few months.
Against the backdrop of persistent power outages and severe FX restrictions, Egypt’s
economy has slowed sharply in 2015, noted the report.
Capital Economics thinks that Egypt's economy should recover over the next couple of years. To start with, natural gas output is set to rise which should improve electricity supplies.
Meanwhile, changes at the Central Bank of Egypt suggest that policymakers are gearing up
to devalue the pound. Pinning down the exact time of this move is difficult.
Capital Economics expect the currency to fall to 8.50/US$ by end-2016, which will allow the central bank to dismantle FX restrictions, reducing disruptions to activity.
The country's economic recovery will be limited by a couple of factors;thus are the devaluation of pound which will keep inflation high in 2016.the tourism sector looks set to struggle following the shooting down of a Russian plane in the Sinai.
Capital Economics expects Egypt's DP growth to pick-up from 2.5% in 2015 to 3.5-4.0% in 2016-17.
