Fo­cusE­co­nomics fore­cast CBE cut overnight de­posit rate to 14.25% in CY 2019, 11.71% in CY 2020

The Daily News Egypt - - News - By Mo­hamed Samir

In the first quar­ter (Q1) of fis­cal year (FY) of 2019, which runs from July 2018 to June 2019, the an­nual eco­nomic growth rate mod­er­ated slightly from the pre­vi­ous quar­ter’s mul­ti­year high,ac­cord­ing to Fo­cusE­co­nomics’ Con­sen­sus Fore­cast - Mid­dle East & North Africa De­cem­ber re­port.

Fur­ther­more, the re­port cites that the largest con­tri­bu­tions to growth in Q1 came from the nat­u­ral gas, whole­sale and re­tail, agri­cul­ture, and telecom­mu­ni­ca­tions sec­tors, con­sec­u­tive ly. Mean­while, they at­trib­uted the slight de­cline in growth to higher in­fla­tion, as well as a small uptick in the un­em­ploy­ment rate, and slower in­dus­trial pro­duc­tion growth.

The Q2 got off to a rocky start in Oc­to­ber,with busi­ness ac­tiv­ity in the non-oil pri­vate sec­tor, con­tract­ing for the sec­ond con­sec­u­tive month, at a faster pace than in Sep­tem­ber. More en­cour­ag­ingly, the IMF is close to mak­ing a fur­ther $2bn fi­nan­cial as­sis­tance avail­able to Egypt,and praised the gov­ern­ment for re­cent re­form ef­forts on 31 Oc­to­ber.

Con­se­quently, Fo­cusE­co­nomics’ pan­el­lists ex­pect the GDP to ex­pand by 5.2% in FY 2019, which did not change from last month’s fore­cast,and by 5.2% again in FY 2020.

In the same con­text, the non-oil pri­vate sec­tor re­mains lack­lus­tre in Oc­to­ber. Emi­rates NBD Egypt’s pur­chas­ing man­agers’ in­dex (PMI) ticked down to 48.6 in Oc­to­ber,com­pared to 48.7 in Sep­tem­ber.The in­dex there­fore re­mained be­low the 50-thresh­old,that sep­a­rates ex­pan­sion from contraction in the non-oil pri­vate sec­tor, for the sec­ond con­sec­u­tive month.

“Our pan­el­lists ex­pect to­tal in­vest­ment to grow by10.5% in FY 2019,which is up by 0.2% from last month’s fore­cast, and 9.9% in FY 2020,” the re­port states.

In re­gards to the mon­e­tary sit­u­a­tion, in­fla­tion ac­cel­er­ated to 17.7% in Oc­to­ber, af­ter a16% in Sep­tem­ber, un­der­pinned by higher prices for food and bev­er­ages, hous­ing, wa­ter, elec­tric­ity, gas and other fu­els, as well as trans­porta­tion. The re­port fore­casts in­fla­tion to reach an av­er­age of 12.8% in Cal­en­dar Year (CY) 2019 and 10.3% in CY 2020.

The Cen­tral Bank of Egypt (CBE) left the overnight de­posit rate at 16.75%, the overnight lend­ing rate at 17.75%, and the main op­er­a­tion rate at 17.25%, at its mon­e­tary pol­icy meet­ing on 15 Novem­ber.

The re­port fore­sees the CBE to de­liver rate cuts in their next meet­ing on 27 De­cem­ber.The overnight de­posit rate is seen by the end of CY 2019 at 14.25% and CY 2020 at 11.71%.

On the other hand, Fo­cusE­co­nomics ex­pects the pound to slightly weaken and end CY 2019 at EGP 18.17 per USD and CY 2020 at EGP 18.59 per USD, down from the cur­rent rates at EGP 17.89 per USD.

Fo­cusE­co­nomics ex­pects the pound to slightly weaken and end CY 2019 at EGP 18.17 per USD and CY 2020 at EGP 18.59 per USD

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