Egypt’s economic growth rate witnessed a small slowdown to 3.8 percent in the second quarter of this fiscal year 2016/17, compared to 4 percent in the same period the year before, the country’s planning minister announced on Sunday.
In a press conference, Minister Hala El-Saeed attributed the drop to a decline in consumption and rise in the price of imports due to the flotation of the pound, as well as a drop in tourism and Suez Canal revenues, state news agency MENA reported
El-Saeed said that some sectors did accomplish growth, such as construction, real estate, telecommunications, and manufacturing industries, but did not provide numbers.
Egypt’s budget deficit dropped to 5.4 percent of Gross Domestic Product (GDP) during the first half of FY 2016/17, which ends in June, compared to 6.4 percent for same period last year.
According to the minister, Egypt will aim for an economic growth rate of five percent in FY 2017/18. She added that the plan includes a growth rate between 6 and 6.5 percent for 2020.
In 2014, Egypt introduced a number of fiscal reforms including fuel-subsidy cuts and new taxes to ease a growing budget deficit.
In early November, Egypt's central bank freely floated the currency and raised key interest rates as part of a set of reforms aimed at alleviating a dollar shortage and stabilising the country's flagging economy.
Egypt's tourism industry has been hit hard since a Russian passenger plane crashed over the Sinai in 2015, with the number of tourists visiting the country dropping by 50 percent in the first half of 2016 compared to the previous year, according to Egypt's Tourism Authority.
Revenues from tourism dropped from $6.1 billion in 2015 to $3.4 billion in 2016, according to statements by central bank Governor Tarek Amer in January.
‘Total investments on the rise’
El-Saeed added that the country’s total investments increased during the second quarter from October to December 2016 to EGP 43 billion, growing 44 percent and reaching 16.4 percent of GDP.
Finance Minister Amr El Garhy said in televised statements that Egypt expects foreign direct investment to increase to $13-15 billion in FY 2017/18.
Around USD 3.5 billion in foreign investment has flowed into Egypt through treasury bills and bonds since the November flotation.