Ernst & Young Forecasts Sharpest Inflation Slowdown in Egypt in Three Years

Ernst & Young forecast that Egypt is set to witness its most significant slowdown in inflation in nearly three years, supported primarily by growing stability in exchange rates, which is helping absorb earlier price shocks across the market.

According to Ernst & Young, the recent decline in Egypt’s inflation rates, now at their lowest levels in about three years, signals a relative improvement in key economic indicators and reflects the market’s response to the monetary and fiscal measures implemented by authorities.

The firm noted that exchange rate stability is playing a central role in easing inflationary pressures by limiting the transmission of currency volatility into the prices of goods and services. This, Ernst & Young said, has contributed to a gradual rebalancing of price levels following periods of sharp increases.

In a related development, Ernst & Young expects interest rates to trend downward in the coming period, in line with a broader global shift toward more accommodative monetary policies. Such a move could support banking credit growth and enhance borrowing capacity for both businesses and individuals.

The firm added that lower interest rates may have a positive impact on domestic demand by stimulating consumption and investment, thereby supporting a gradual recovery in economic activity and improving prospects for more balanced and sustainable growth.

Ernst & Young concluded that the combination of slowing inflation and an improving credit environment could bolster investor confidence and help create a more stable economic outlook for Egypt in the period ahead.