In Egypt, all macroeconomic indicators are deteriorating. In 2023, economic growth should slow down and CPI inflation reach a high level. Contrary to the other emerging economies, inflation is expected to accelerate in 2023 -notably given the depreciation of the pound- by around 50% for a year. Egypt is unable to reduce its external imbalances given the lack of portfolio investments. The sale of public assets to foreign investors could provide liquidity in foreign currencies. However, the timing of the privatization process does not match with the urgent need for foreign currency. As a consequence, downward pressures on the pound are likely to continue at least in the short term. On the budget side, a primary surplus (which excludes interest payment) should be recorded despite the rise in current fiscal expenditures, which should limit the impact of inflation on household purchase power. The fiscal deficit should rise for the first time for 8 years. It is partially linked to the sharp increase in interest rates and thus the debt service of the government.
