A research note published by the US-based CI Capital says that Egypt’s economy is slowing down despite a lack of up to date GDP data.

The note cites the 50 per cent year-on-year decline in tourist visitors in March this year due to heightened security concerns following the downing of the Russian jet last year. Tourist numbers also show no signs of increasing as a number of major airlines continue to postpone flights, although flights from the UK and Russia are expected to resume soon.

Domestic demand is also expected to dampen, says the report. The recent devaluation of the currency has allowed for inflation to reach 10 per cent year on year in April, which the research note says is up from 9 per cent year on year in March. As a response to this and in an attempt to controls prices the Central Bank of Egypt also increased interest rates by 150 basis points, both measures are understood to be putting pressure on the domestic market.

Further to this, Egypt’s cabinet recently approved a law to introduce a value added tax (VAT), which will put further pressure on the local market.

The currency situation remains to be a problem for key import industries as a further devaluation is required, says CI Capital.

In saying this, the research note points out to increasing gas outpoints as an opportunity for economic growth. The note believes that GDP will grow by three per cent this year. In order for Cairo to achieve the growth required to revive the economy, Suez Canal revenues, tourism and foreign direct investments will need a major pick up, according to analysts.