EM EMEA Flash – Egypt Economic Update

Egypt Economic Update – May 2024

• Economic growth. Despite the economic challenges and currency crisis, Egypt has recently received significant international support, and maintains hope for its economic outlook.

• Inflation. Headline consumer prices eased back to 32.5% y/y in April from 33.3% y/y in March. Core inflation dropped to 31.5% y/y in April from 33.7% y/y in March. However, it remains well above the Central Bank of Egypt’s (CBE) target, and another anticipated increase in fuel prices in the upcoming months could further exacerbate the situation.

• Interest rates. This month, the CBE kept its deposit and lending rates at 27.25% and 28.25%, respectively, in line with our (and consensus) expectations (see here).

• FX view. Within the EM EMEA complex, the Egyptian Pound (EGP) is screening robustly. A benign outlook for capital flows is supporting the currency, on the back of higher treasury receipts from the UAE’s investment in the Ras el Hekma project (see here).