Country Economic Forecasts > Egypt Arab Rep

The economy continues to face significant challenges, foremost among which is a sharp contraction in tourism. At the same time, large macroeconomic imbalances, high public debt and currency risk are weighing on private sector investment and the business environment. Inflation has fallen to below 10% in recent months, but the 12.5% devaluation in March will push prices higher during the rest of the year. It remains to be seen whether the effects of the devaluation will prompt fresh social unrest, which could further destabilise the political environment. But the EGP devaluation was much needed from an economic perspective if the central bank builds on that move by increasing the flexibility of the exchange rate, it would support economic growth during the second half of 2016. But we still expect GDP growth of just 2.6% in 2015/16, with only a modest pick-up to 3.3% in 2016/17.