Egypt External Debt (USD bn)

The economy likely lost steam in October–December 2022 relative to July–September, due to aggressive monetary tightening, a sinking pound, import controls and rising inflation. PMI data showed conditions in the non-oil private sector deteriorated at a steeper rate in October–December, while annual industrial production growth slowed in the same period. Heading into 2023, PMI data for the first two months of this calendar year suggests activity is muted. The pound is down around 20% year to date, spurring price pressures and undermining consumer purchasing power. Moreover, the lagged impact of last year’s 800 basis points of rate hikes will also be weighing on demand. In other news, on 7 February, Moody’s downgraded the country’s credit rating to ‘B3’ with a stable outlook on the back of dwindling external buffers and diminishing shock absorption capacity, boding poorly for borrowing costs.