Friday, the International Monetary Fund released its World Economic Prospects report, which forecasts inflation rates in Egypt with a pessimistic view. The fund raised its inflation forecast for the current year from 6.3% to 7.5%. Over the next five years, expectations rose from 7.1% to 7.4%.
Regarding the Current Account Deficit levels, the size of the deficit increased during the current year from 3.7% to 4.3%, while the fund expected an increase in the deficit next year, up to 4.6%. The fund also lowered its forecast for the growth rate of the Egyptian economy during the next fiscal year from 5.6% to 5%. However, its growth forecast for the next five years remained at the same level by about 5.9, while it raised its growth forecast for the current fiscal year from 5.6% to 5.9%.
The report’s forecasts regarding unemployment rates were more optimistic, as the fund reduced its unemployment forecast for the current year from 9.2% to 6.9%. In the same vein, the IMF Managing Director Kristalina Georgieva said that the conditions of the Egyptian economy are worsening after it suffered a significant setback due to a global rise in fuel and food prices.
The Central Bank of Egypt used foreign exchange reserves to protect the local currency, she noted. This came during a press conference held on the sidelines of the Spring Meetings of the fund. Georgieva explained that the fund is currently working with the Egyptian government on a new program to achieve financial stability and continue economic reforms. The program, she added, will take into account the fact that a large number of Egyptians have become more sensitive to economic fluctuations.