Doha, (Business News Report)|| Moody’s, the credit rating agency, revised its outlook for the Arab Republic of Egypt from stable to negative.
Meanwhile, Moody’s affirmed rating of Egypt at (B2).
The agency emphasized that the negative outlook reflects the increasing side risks of Egypt’s ability to absorb external shocks.
Moody’s said that the tight global financing conditions increase the risks of weak cash flows compared to Moody’s current expectations to support Egypt’s external situation.
The agency explained that Egypt’s strong trend towards GDP growth supports economic flexibility and the possibility of attracting foreign direct investment.
Egypt’s economy was hit after Russia’s invasion of Ukraine and US interest rate hikes prompted foreign investors to flee emerging markets.
Russia and Ukraine were also major exporters of wheat to Egypt, and a major source of tourist influx.
The Egyptian government estimated the direct and indirect cost of the Russian-Ukrainian war on the state budget annually at about 465 billion pounds (about $25.5 billion), according to statements by the Egyptian Prime Minister.
The Central Bank of Egypt raised interest rates by 2% last Thursday, in an attempt to contain inflationary pressures, and to attract foreign investments in dollars for government debt instruments, after billions of dollars came out following the Russian-Ukrainian crisis.
Egypt lowered its forecast for the target growth rate in the next fiscal year, which begins on July 1, to 4.5%, according to previous statements by Prime Minister Mostafa Madbouly, which is lower than the 5.5% expected last March.
According to what was announced by the Egyptian Minister of Planning Hala Al-Saeed, the country’s economic growth in the first nine months of the current fiscal year amounted to 7.8%, compared to 1.9% a year ago, and it is expected that growth throughout the year will reach about 6.2%.
The growth of the economy in Egypt reached 3.3% for the last fiscal year 2020-2021, which witnessed the spread of the Coronavirus pandemic.
Al-Saeed addressed the sectoral growth rates during the first nine months of the current fiscal year, noting that there was a noticeable improvement in all economic activities during this period.
Meanwhile, the leading sectors for growth were: the restaurants and hotels sector, which witnessed a growth of 62.8%, telecommunications by 16.4%, the Suez Canal by 13%, the manufacturing industry by 10.3% and construction and building by 8.2%.
