According to Morgan Stanley, Egypt's Economy Set to Grow 4.2% in Fiscal Year 23/24

egypt Wed, Aug. 2, 2023
Morgan Stanley revised down its forecast for lower growth in Fiscal Year (FY) 23/24 to 4.2% from 5%, “which in turn is driven by larger-than-expected import compression and subdued financial inflows leading to supply shortages,” the report stated.

In its “Egypt Economics, Sovereign Credit and Equity Strategy” report, the investment bank lowered Egypt’s current accounts deficit forecast to $9.8 billion for FY23 and $10.2 billion for FY2024.

In the report, Morgan Stanley also stated that The International Monetary Fund (IMF) is expected to conduct its first and second reviews of the Egyptian economy for the $3 billion four-year loan program between September and December 2023.

The report comes after the Government of Egypt’s announcement of the outcome of the sale of the state-owned enterprises. Egypt raised $1.9 billion in IPO deals as of July 11, $1.65 billion of which is in US dollars, and another $1 billion in the pipeline.

We think Egypt needs progress on FX flexibility to sustain its external adjustment beyond the short term. The rest of the financing gap is due to errors and omissions outflows, plus the delays in the sales of state-owned assets which was factored in at $2 billion by the end of June FY 22/23.

Minister of Finance Mohamed Maait recently announced that the real GDP grew by 4.2% in FY 22/23, down from 6.6% in the FY 21/22.