Cairo: Egypt’s economy is set to grow 3.3 per cent this fiscal year, according to economists polled by Reuters, who nudged up their forecasts from last quarter as confidence has started to return.

The forecast is close to the government’s prediction of 3.5 per cent growth in gross domestic product.

Three years of turmoil since the uprising that toppled Hosni Mubarak has hit the economy, discouraging investors, causing tourists to flee and slashing growth to below 2 per cent in the 2010/11 financial year.

Egypt has received more than $12 billion (Dh44 billion) in aid from Gulf states since ex-army chief Abdul Fattah Al Sissi ousted president Mohammad Mursi of the Muslim Brotherhood in July 2013.

The aid has kept the economy afloat but the government is also introducing reforms as it tries to encourage growth while curtailing its budget deficit.

In July, Egypt slashed energy subsidies that have long weighed on state finances, resulting in price rises but sending a signal that it was willing to push ahead with reforms.

The consensus of 11 economists polled by Reuters in the past two weeks was for economic growth of 3.3 per cent in the current fiscal year ending June 2015 — above the 3.2 per cent forecast in a poll published in May.

Recovery

Egypt’s gross domestic product (GDP) grew 2.1 per cent in 2012/13 but growth figures for last year have not been issued.

Finance Minister Hany Kadry Dimian said last month that GDP grew 3.5 per cent in the fourth quarter of the 2013/14 fiscal year, suggesting the economy was recovering.

Dimian told Reuters in July that Egypt was targeting growth of 4 to 5.8 percent over the next three years.

That target falls broadly in line with analysts’ expectations in the poll. They forecast that growth would accelerate to 4 per cent in the next fiscal year and 4.5 per cent in 2016/17.

Though growth forecasts have improved, subsidy cuts are lifting inflation.

Analysts raised their inflation forecasts for this financial year to 11.8 per cent, from 9.7 per cent in the previous quarterly poll. Inflation would ease to 9.7 per cent in the next financial year and 8 per cent in 2016/17, the latest poll predicts.

Urban consumer inflation stood at 11.5 per cent in August, up from 11 per cent the previous month and 9.7 per cent a year earlier. Core inflation stood at 10.07 per cent in August, up from 8.97 per cent a year ago.