Moody's: Egypt's GDP Growth Forecast to Reach 5.8% in 2020

Moody's financial services company said Egypt's GDP growth is expected to reach 5.6% in 2019 and 5.8% in 2020, supported by the Central Bank of Egypt's decision to cut interest rate and the decline in the inflation rate.

In a report, Moody's Investors Service forecast that CBE would continue in interest rate cut policy in 2020, supported by the decrease in the inflation rate.

Moody's hailed CBE's Monetary Policy Committee's decision to cut the overnight deposit rate, the overnight lending rate, and the rate of the main operation by 100 basis points (one percent) to 13.25%, 14.25%, and 13.75% respectively.

The decision is positive for the banking sector, enhancing the business community's trust and economic growth.

Interest rate cut and decline in inflation will encourage capital expenditures. This, in turn, will promote consumer spending by boosting the interest-bearing debts' ability in light of the government funds by reducing the interest rate bill.

Moody's Investors Service expected credit rates growth by more than 15% in 2020, adding the nonperforming loan (NPL) dropped to 4.1% of total loans in March 2019.

Earlier in August, the Central Agency for Public Mobilization and Statistics (CAMPAS) announced that Egypt's annual inflation went down 6.7%.

In a research in February, Senior Vice President at Moody's Investors Service Constantinos Kypreos said: "Accelerating growth in Egypt reflects increased public and private-sector investment, higher exports and a recovery in tourism. We expect balance sheet growth of around 15% in 2019 and for banks to maintain ample local currency funding, high liquidity, and strong and stable profitability."