Egypt’s GDP grow to record 4% in FY2023/2024: BNP Paribas



Wed, 19 Apr 2023 - 12:36 GMT


Wed, 19 Apr 2023 - 12:36 GMT

International banking group, BNP Paribas, announced lowered expectations for Egypt’s GDP growth for FY2023 at 4 percent, compared to the previous fiscal year of 6.6 percent, pointing towards an uncertain outlook against accelerating inflationary pressures.

BNP Paribas contributed the short-term deaccelerated growth to weakened household purchasing power and a slowdown in some major infrastructure programs, projecting that inflation will remain very high in the short-term.

“Despite the expected reduction in the current account deficit, the financial support from international financial institutions, the cautious return of portfolio investments at the beginning of 2023 and financial support from Gulf states…foreign currency liquidity remains under pressure,” the report explained.

In its report, the banking group stated that the Central Bank of Egypt’s foreign exchange reserves rose moderately, recording $37 billion in February 2023, with banks' net external debt, of which approximately 40 percent is short-term, having reached $13.9 billion in February.

“This is close to the highest levels reached in Q4 2022 ($16.5 billion),” it wrote, adding that this was caused by significant external financing demands, as well as volatile foreign currency resources. BNP predicts that the demand for hard currency will continue to be substantial for at least the two coming years.

The report also highlighted some of the government’s efforts to curb the effect of inflationary and hard currency pressures, including its IPO program – which aims to attract $40 billion by 2026 – and increasing minimum salaries and pensions for employees in the public sector.

The current account deficit is expected to decrease to around $13.5 billion in FY2023/2023 thanks to support from hydrocarbon exports, the increase in revenue from the Suez Canal, and restrictions on imports, it added.

BNP does expect Egypt’s budget deficit to increase this year to around 8 percent of its GDP, driven by rising debt service (interest only). “This increased by 36 percent in the first half of the fiscal year, while the increase in current expenditure remained contained. In total, budgetary expenditure increased by 20 percent over the period, while the increase in revenue was 15 percent.”



Leave a Comment

Be Social