Egypt’s economic growth is expected to slow to 5.5 percent in the fiscal year FY 2019/20, reaching 5.8 percent in the coming fiscal year, according to a recent poll of economists done by Reuters.
This growth rate is below the Egyptian government's target, as Egypt nears the end of an IMF-backed economic reform program.
As Reuters revealed, the forecasts were similar to a Reuters survey of economists released three months ago. Growth in FY 2019/20 was lower than the government’s target of 6 percent.
Egypt’s Prime Minister Mostafa Madbouly said last week that gross domestic product (GDP) grew by 5.6 percent in the FY2018/19, a bit higher than the 5.5 percent expected in the April Reuters poll.
The International Monterey Fund (IMF) had fixed its projection for the GDP growth rate for FY2018/19 at 5.5 percent, while it expected to hit 5.9 percent in FY2019/20.
Aside from the oil industry, Egypt’s economy has struggled to attract foreign investors since the 2011 uprising that ended Hosni Mubarak’s 30-year rule, Reuters said.
Egypt’s non-oil private-sector activity contracted for the second consecutive month in June, according to the Emirates NBD Egypt Purchasing Managers’ Index (PMI). Private-sector activity has expanded in only five months over the last three years.
Earlier this month, Egypt introduced its latest round of fuel subsidy cuts, raising prices by 16 to 30 percent, as it nears the end of the IMF program.
Scaling back fuel subsidies that have been a strain on the budget for decades was a key condition for Egypt to secure a three-year $12 billion reform package in 2016. Other conditions to secure the package included a sharp devaluation of the Egyptian pound and implementing a value-added tax (VAT).
Regarding inflation, the poll said that there is a consensus that Egypt’s urban consumer inflation would stand at 13 percent in the FY2019/20, down from the 14.2 percent predicted three months ago for the prior fiscal year.
In the same vein, annual urban consumer price inflation plunged unexpectedly to 9.4 percent in June from 14.1 percent in May, before fuel prices were raised.