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Saturday, 27 February 2021

Egypt expected to restore pre-pandemic real GDP growth at 5.5% during FY2020/21

'Egypt’s economy continues to be praised by international financial institutions amid the COVID-19 crisis based on its positive indices that mirror its resilience against internal and external shocks' said Finance Minister Maait

Doaa A.Moneim , Wednesday 20 Jan 2021
Mohamed Maait
Egypt's Finance Minister Mohamed Maait (Photo: Al-Ahram)
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Egypt is expected to be the only country in the Middle East to restore pre-COVID-19 real GDP growth rates in the current FY2020/2021 (ends in June) to reach 5.5 percent, Minister of Finance Mohamed Maait said on Wednesday.

Maait made his statements based on the recent forecasts released by the Standard Chartered Bank regarding Egypt’s economy during the current fiscal year.

Maait also noted that this prediction is consistent with the bank’s previous predictions for Egypt to be among the largest ten economies globally by 2030.

“Egypt’s economy continues to be praised by international financial institutions amid the COVID-19 crisis based on its positive indices that mirror its resilience against internal and external shocks and its ability to recover promptly from the negative repercussions of the pandemic”, said Maait

He also said that all the positive forecasts that have been released by international institutions concerning Egypt’s economic performance since the onset of the pandemic are attributed to the country’s successful economic reform programme that left financial spaces for the government that enabled it to increase public investment allocations, boost spending on improving healthcare and education services, in addition to backing Egypt’s digital transformation amid the pandemic.

In its first review on Egypt’s stand-by agreement loan, completed in January, the International Monetary Fund raised its projections for Egypt’s real GDP growth for FY2020/21 to 2.8 percent, up from the 2 percent projected in June, reflecting the milder than-anticipated contraction in the country’s economy, making it likely one of the few countries to record positive growth (around 1.5 percent) in 2021.

Yet, according to the global economic prospects 2021 report released in January, the World Bank projected Egypt’s economic growth to slow down to 2.7 percent in FY2020/2021, down from 3.6 percent in 2020, and to bounce back to 5.8 percent in 2022.

The report attributed the economic growth contraction in FY2020/21 to the collapse in tourism, gas extractives, and a slowdown in other key sectors such as manufacturing.

In the same vein, Fitch Solutions downgraded its projections for Egypt’s real GDP growth for the second time in two months to reach 3 percent in 2021, down from the 3.2 percent that was expected in December.

This came within Fitch Solutions’ MENA macroeconomic update that was released in January and shared with Ahram Online, which showed that Egypt was the only country that had witnessed positive growth in 2020, estimated at 3.5 percent.

According to the results of the first half of FY2020/21, Egypt’s budget deficit to GDP ratio declined to 3.6 percent from July through December 2020, down from 4.1 percent in the same period of FY2019/2020, achieving a budget initial surplus of EGP 14 billion, according to Maait.

Also, the state’s revenues are estimated to decrease by no less than EGP 150 billion in the current FY2020/21, given the ongoing crisis.

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