Egypt's economy expected to grow 4%

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Wednesday - 19 April 2017

Egypt - Egypt's economy is expected to grow 4.0 percent in the 2016/17 fiscal year ending in June, broadly in line with the finance minister's latest projection of 3.8 to 4 percent, a Reuters poll showed on Wednesday.

The poll predicts economic growth will slow the following year to 3.3 percent, well below the government's target of 4.8 percent laid out in the budget, before accelerating to 4.0 percent in 2018/19, according to the median of 11 economists polled by Reuters.

The forecasts show annual growth is expected to remain significantly below the roughly 7 percent recorded before the 2011 political uprising that led to the overthrow of president Hosni Mubarak and scared off tourists and foreign investors.

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The government has announced a sleuth of reforms including a currency float, fuel subsidy cuts and a value-added tax in an effort to bolster the economic recovery and secure a $12 billion loan from the International Monetary Fund.

The pound currency has depreciated by roughly half since currency controls were lifted in November, leading to a surge in inflation and fall in imports.

Egypt's core inflation rate declined for the first time in eight months in March, slowing to 32.25 percent year on year from 33.1 percent in February.

The median forecast for annual average core inflation which takes an average of the 12 monthly readings was 13.7 percent for the current fiscal year, up from a previous forecast of 13.0 percent.

Analysts expect inflation to jump in 2017/18 to 21.0 percent before slowing to 13.0 percent the following year.

The central bank has been trying to balance the need for economic growth with keeping inflation risks at bay, raising its main interest rate by 300 basis points to 15.75 percent on Nov 3, the same day it floated the pound.

Egypt has held the rates steady since then.

REUTERS