Deutsche Bank gives Egypt’s economy ‘positive’ outlook



Wed, 07 Jun 2017 - 06:00 GMT


Wed, 07 Jun 2017 - 06:00 GMT

Deutsche Bank -  via Wikimedia Commons

Deutsche Bank - via Wikimedia Commons

CAIRO – 7 June: Global financial service provider Deutsche Bank has a positive near-term outlook for Egypt on strengthening the economy, the bank said in a Monday press release.

Egypt’s economic vulnerability has declined as a result of high foreign reserves, which reached $28.6 billion in April, and the rebound of the Egyptian pound by 0.39 percent from the start of Q2 2017 to date.

Deutsche Bank estimated GDP growth to have recorded 3.9 percent in Q1 2017, but its prediction for the growth rate for 2017 is below the 4.6 percent set by the government.

The Egyptian pound is also anticipated to remain stable or to slightly appreciate against foreign currencies in 2017.

The bank is also less optimistic with regards to Egypt’s inflation in 2017, which they set at 20 percent, and consequently Deutsche Bank does not expect the Central Bank of Egypt (CBE) to cut the interest rates over the short term from the current rate of 16.75 percent.

As a result of the CBE’s decision to raise interest rates by 200 basis points in late May, the influx of foreign currency into Egypt’s debt and equity boosted, the bank said.

Regarding the International Monetary Fund (IMF)’s $12 billion loan agreement with Egypt, the bank said high inflation and social stability concerns before the 2018 presidential elections will pose risks to Egypt’s ability to stay in the program.

“Structural reforms supported by the IMF program may run into reform fatigue leading to fiscal slippages, especially ahead of the 2018 presidential elections,” Deutsche Bank said.

Financing from international banks and $4 billion Eurobond issued in January and $3bn in May have prompted the bank to say private sector inflows have exceeded its expectations.

Regarding foreign direct investment, the bank attributed anticipated offshore Zohr gas field production, planned coal-fired and renewable plants and new oil and gas exploration agreements approved by the government in May to a recovery in the FDI levels in 2017.



Leave a Comment

Be Social