Consumer Prices Will Spike By 7.5% This Year

The global economy has been feeling the impact of the Russia-Ukraine war, and the latest GDP forecast by the International Monetary Fund (IMF) spells out its implications for Egypt with a mixture of cautious optimism and careful warnings.

While the war's effects on international trade and exchange means that Egypt's economy won't grow as much as previously expected, the IMF still expects the Egyptian economy to expand by 5.9% in the 2021-2022 fiscal year, up from 5.6% growth in the IMF's last forecast in January. This is notably a more positive growth outlook than reported by the Egyptian government, which expects 5.7% growth.

Consumer prices will rise by 7.5% according to the IMF, with inflation continuing to rise next year. The Russian invasion of Ukraine is expected to affect Egypt's deficit, since it will force the country to rely more on import spending while harming tourism revenues. This reflects a similar situation across most of the world's emerging markets, especially those that rely on imports for their food and oil.

The Egyptian government is currently in talks with the IMF for a support programme that could cost as much as USD 3.5 billion, with the possibility of an extended fund facility alongside it.