Macroeconomic Forecast Egypt

April 2006 | Macroeconomic Forecasts

We continue to expect growth of 5.7% in 2006, with private consumption gaining a particular boost from tax cuts. We then expect growth to fall slightly to 4.6% in 2007 as the fiscal stimulus wears off. However, improving investment should help to underpin growth over the forecast period, as the government's economic reforms attract foreign investors, while the liberalisation of the financial services sector will facilitate domestic investment. Our existing forecasts are based on the oil price forecasts made in Q106; key indicators including exports and growth will be revised upward next month, as part of our quarterly forecast review, to take our new (higher) oil price forecasts into account. Finally, plans to cut subsidies pose a downside risk to our projections for government spending (and therefore the fiscal balance) but we will not factor these in to our forecast until the extent of fiscal reforms is made public.

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