File Photo: A woman wears a protective face mask inside a Carrefour hypermarket while Egypt ramps up its efforts to slow the spread the coronavirus disease (COVID-19) in Cairo, Egypt March 19, 2020. REUTERS
Egypt is expected to see a slowdown in its real GDP growth of three percent in 2021, down from the 3.6 percent in 2020, before rebounding to 4.9 percent in 2022, according to the African Development Bank (AfDB).
In its outlook report on Africa’s economy in 2021, AfDB said that Egypt's resilience in navigating the crisis has benefitted North Africa, that saw only 1.1 percent contraction in 2020.
The report added that Egypt is the only country that maintained positive growth at 3.6 percent in 2020, while other countries like Tunisia, Algeria and Morocco have been hit severely.
North Africa’s real GDP is expected to bounce back to four percent in 2021 and to six percent in 2022, also according to the report.
The report projected Africa’s real GDP growth to rebound by 3.4 percent during 2021 after contracting by 2.1 percent in 2020 due to the globally unprecedented COVID–19 pandemic.
The report said that the projected recovery from the worst recession in more than half a century will be underpinned by a resumption of tourism, a rebound in commodity prices and the rollback of pandemic-induced restrictions.
Africa’s outlook is also subject to great uncertainty from both external and domestic risks, the report indicates.
Meanwhile, the report expects that tourism-dependent economies to recover by 6.2 percent after declining by 11.5 percent in 2021 while, other-resource-intensive economies are projected to grow by 3.1 percent after a decline of 4.7 percent in 2020.
On the other hand, non-resource-intensive countries, where output shrank by 0.9 percent in 2020, are projected to grow by 4.1 percent in 2021, also according to the report.
As a result of the pandemic, Africa’s macroeconomic fundamentals have been weakened. Accordingly, the report expected the continent’s debt burdens to go up by 10 to 15 percent over short to medium term.
In this regard, the report noted that Africa’s fiscal deficits have doubled in 2020 to a historical high of 8.4 percent of GDP, exchange rate fluctuations have been elevated and inflation has inched up, with external financial inflows heavily disrupted.
Moreover, COVID–19 effects are expected to reverse hard-won gains in poverty reduction over the past two decades, as the revised estimates show that up to 38.7 million more Africans could slide into extreme poverty in 2020 and 2021, bringing up the total to 465.3 million people, or 34.4 percent of the African population, in 2021.
Africa’s inflation is projected to see a decline to nine percent in 2021, down from 10.4 percent in 2020, according to the report.
Foreign direct investment (FDI) flows to Africa are estimated to have been contracted by 18 percent in 2020 to reach $37.2 billion, down from the $45.3 billion in 2019 driven by the heightened uncertainty in the investment climate.
“The decline in investment flows is broad-based - affecting all sectors - including tourism, leisure, energy, aviation, hospitality and manufacturing,” said the report.
Furthermore, portfolio investments reversed entirely in 2020 from a net inflow of $23 billion in 2019 to a net outflow of $27 billion in 2020, as investors liquidated their investments in search of safer assets elsewhere.
It is also estimated that the official development assistance (ODA) - headed to Africa - decreased by 10 percent in 2020, to reach $47.5 billion, down from the $52.8 billion in 2019.