Macroeconomic Forecast Egypt

September 2005 | Macroeconomic Forecasts

We have increased our FY05-06 real growth forecast to 5.9%, following 4.9% growth in FY04-05. This assumes that the September 1 cut in interest rates, together with the major tax cuts introduced from July this year, will stimulate higher private demand growth, while ongoing economic reforms - and the international praise they attract - will lead to a higher rate of investment growth. We have also revised our inflation forecasts down in light of better-than-expected consumer price index data for January-June; key risks here come from the interest rate cut and from currency dynamics. The pound is likely to remain relatively stable and we do not foresee any potentially inflationary depreciation: pressures on the unit appear to be weighted to the upside. Full-year budget figures for FY04-05 are not yet available; our budget estimates are based on annualised July-March figures.

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