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Egypt's Inflation in Lowest Rate since Floating Currency

Egypt's Inflation in Lowest Rate since Floating Currency

Thursday, 11 January, 2018 - 11:00
Sellers and shoppers in Sooq El Atba, Cairo. Reuters

Annual urban inflation fell to 21.9 percent in December from 26 percent the previous month for the first time since November 2016 when the currency was floated, the official statistics agency, CAPMAS, said on Wednesday.

Egypt decided in 2016 to fully float its local currency, which lost half its value in a country that relies heavily on imports.

“We expect inflation to continue its decline until it reaches around 12 percent mid this year,” said Reham El Desoki, senior economist at Arqaam Capital.

Inflation has climbed since Egypt floated its currency, the pound, in November 2016, reaching a record high of 35.3 percent in July after energy subsidies were cut. It has gradually eased since July. Urban consumer price inflation month-on-month rate fell to -0.2 percent, in Dec 2015, from 1 percent in November.

Egypt’s inflation is expected to fall below 20 percent next month and to 10-12 percent during 2018, said Finance Minister Amr El Garhy.

The World Bank forecast Tuesday Egypt’s economy to grow 4.9 percent in 2018, compared to 4.4 percent in 2017, becoming the second highest growing economy in MENA after Djibouti (expected growth of 7 percent).

In January 2018, in the Global Economic Prospects report about MENA, the World Bank said that Egypt’s economy would grow 5.6 percent in 2019 while growth in the MENA is expected to jump to 3 percent in 2018 and 3.2 percent in 2019.

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