By; Nour Adel
EFG Hermes, one of the largest investment banks in the Middle East, expects the Egyptian economy to grow by 4.8% in 2018, higher than the 3.8% expectations of IMF and World Bank.
In its annual report about 2018 expectations, EFG-Hermes said that inflation will fell to 20.9% by the end of the current fiscal year 2017-2018 and 10.5% by the end of the fiscal year 2018-2019.
The year of economic recovery
The annual report of EFG-Hermes predicted that gross domestic product targeting a level of 265.5 billion dollars at the end of the current fiscal year, compared to 247.6 billion dollars in the last fiscal year. It expects that the gross domestic product to reach 307.8 billion dollars at the end of fiscal year 2018 -2019.
The report pointed out that the Egyptian government still has one measurement to continue the procedures of restructuring of the subsidies system provided in the economic reform program, is to reduce the subsidies bill by about 56% to the equivalent of 4 billion dollars, representing 1.3% of the gross domestic product.
Hermes predicted a gradual reduction of interest rates during 2018 between 300 to 400 points equivalent to "3 to 4%". In addition to a low yield of the treasury bills which has already begun to decline since the end of 2017.
The report also predicted improving Egyptian pound value which will rise against the dollar during the year 2018 to reach about 17 pounds to the dollar.
EFG Hermes, predicted that tourism revenues in 2018-2019 will rise to 8.4 billion dollars, thanks to the return of Russian tourism, which will increase tourism revenues by between 2 billion dollars and 2.5 billion dollars.
Hermes believes that the start of gas production in the field of ZAHR and other new fields will enable Egypt to raise its production to the highest level in about 5 years, at the level of 6 billion cubic feet in the middle of this year.
Besides, achieving self-sufficiency and dispensing of importing of liquefied natural gas will save between 12 and 15% of the current account deficit.
Hermes said in its report that the Egyptian government is left with a single measure to complete the procedures of restructuring of the subsidies system provided in the economic reform program, which was agreed with the International Monetary Fund. Pointing out that the target is to reduce the subside bill by about 56% to the equivalent of 4 billion dollars, representing 1.3% of the total gross domestic product.