CAIRO, Sept 17 (Aswat Masriya) - Egypt's economic growth witnessed a decline in the first quarter of 2015 to 3 percent while its annual inflation rate reached 11 percent, according to a report by the Arab Monetary Fund released on Tuesday. 

The Arab Economic Outlook Report noted however that the economy grew at a rate of 4.7 percent in the first 9 months of the 2014-2015 fiscal year. 

It projected an increase to 3.8 percent throughout 2015 and 4.5 percent in 2016 as a result of improved stability and more investment in infrastructure projects. 

The report projects a rise from 3.3 to 3.8 percent in 2015/2016 in the global economy versus 2.8 to 3.5 percent growth in the Arab region.

The inflation rate in Egypt is expected to rise from 11 percent in 2015 to 11.5 percent in 2016, compared to a regional average of 7.4 and 7.8 percent respectively.

The report explains that the rise in inflation is due to the removal of subsidies on energy products, impacting transportation costs and food commodity prices, which represent 40 percent of the Consumer Price Index. 

It also attributes the rising inflation to shortage in supply of foreign currency along with the government's depreciation policy, further weakening the Egyptian pound. 

Egypt's economy suffered a decline in foreign exchange availability following four years of political turmoil, which affected the flow of foreign investment. 

Foreign reserves fell from $36 billion before the January uprising in 2011 to $18.1 billion by the end of August 2015.

Egypt's central bank devalued the Egyptian pound against the American dollar twice this year. The dollar is expected to sell for EGP 8 by yearend.