The Economic Pulse

Egypt's economic landscape reveals a tapestry of significant developments, responding dynamically to both internal and external factors. The Central Bank of Egypt's strategic response to a drop in monthly inflation, down to 33.7% annually, includes a substantial 200 basis points increase in key policy rates. While this bold move aims to tackle inflation, concerns loom over potential impacts on purchasing power and the pricing dynamics of goods and services.

Amid these challenges, positive signals emerge from the government's announcement of a robust 5.4% real GDP growth in the first half of the fiscal year, surpassing the previous year's 5.2%. The ambitious target of achieving 5.6% growth in the second half positions the fiscal year for an overall commendable growth rate of 5.8%.

Egypt's net foreign reserves experienced incremental growth in December, reaching USD 35.22 billion, marking the sixteenth consecutive month of recovery since September 2022. Despite external challenges in 2022, the country's resilient performance showcased consistent monthly gains and stability in its external financial position. The dominance of regional deposits, including contributions from Saudi Arabia, the UAE, Qatar, Kuwait, and Libya, played a pivotal role, accounting for over 85% of the total reserves.