Egypt’s economic growth is expected to record 3.3 percent in the current fiscal year (FY) 2020/2021, down from 3.5 percent in FY2019/2020, while the country is projected to witness the highest real GDP growth in the Middle East and North Africa (MENA) region in 2020-2024, projected to reach 4 percent, according to Fitch Solutions.
In its monthly economic update insights on the MENA region, released on Sunday and shared with Ahram online, Fitch Solutions expected Egypt’s inflation rate to record 5.9 percent, while it projected the Central Bank of Egypt to keep the current interest rates at 9.75 percent until the end of 2020.
It also expected the US dollar to be traded at EGP 16.25 until the end of 2020, according to Fitch Solutions.
The purchasing managers’ index and Google mobility data point to widespread disruption to local activity in the second quarter of the FY2020/2021, which ends in December, though conditions are now easing, according to Fitch Solutions.
It pointed out that weak prospects for tourism, investments, and remittance inflows will continue to dampen Egypt’s growth performance as well, while the International Monetary Fund funding and eurobond issuance will support the country’s external position, though risks of renewed volatility persist.
On the other hand, in 2020-2024, Egypt’s budget balance to GDP ratio is projected to record close to -10 percent, with current account balance to GDP ratio seeing negative growth by about -2.5 percent, according to Fitch Solutions.
For the MENA, Fitch Solutions expected the region’s real GDP growth to increase to 3.5 percent in 2021, following a contraction of 5.1 percent in 2020; while the outlook for oil producers, except Iran, appears sluggish as only moderate oil price increases are likely to result in limited oil output growth and continued fiscal restraint.
Elsewhere in the region, limited policy flexibility and socio-political instability are weighing on prospects for a post-COVID-19 recovery, according to Fitch Solutions estimations.
Fitch Solutions also said that Iran accounts for a large share of the gains projected for 2021, following Joe Biden’s win in the US elections which is expected to result in sanctions relief for the Islamic Republic.