Fitch Solutions has downgraded Egypt’s real GDP growth to 2.9 percent in the current FY2020/2021 — which ends in June — down from the 3.2 percent it forecasted in December 2020.
This came within the updated report on the Middle East and North Africa (MENA) region’s economic outlook released on Monday in a webinar organised by Fitch Solutions.
Fitch also downgraded Egypt’s real GDP growth for FY2021/22 — which starts in July — to 5 percent, down from the 5.6 percent it projected in December 2020.
Answering Ahram Online’s question on the reasons behind that revising down, Deputy Head of Country Risk at Fitch Solutions Julie Beckenstein said the slowdown in vaccine rollout and the delay in the tourism sector’s recovery are the main reasons behind revising down Egypt’s economic growth.
The report classified Egypt in the second group of countries that are experiencing a poor healthcare infrastructure, insufficient access to vaccines, and poor policy choices, which all increase the risk of pushing back the vaccination timeline further.
Despite that, Fitch Solutions said in its report that Egypt is one of the few countries globally to see real GDP growth amid the COVID-19 crisis.
It attributed that to the milder lockdown and the performance of the GDP over the fiscal years.
Also, Fitch expected Egypt’s tourism sector to rebound as of the coming FY2021/22 that will provide critical support for the country’s economic growth.
Additionally, expanding in gas production will add further tailwinds to Egypt’s headline growth, according to the report.
The report also noted that Egypt witnessed positive government spending growth.
Selim El-Badri, country risk analyst for MENA region at Fitch Solutions, said that Egypt also is the only country in the region to keep going amid the crisis, benefitting from the fiscal support policy it adopted — particularly slashing Egypt’s central bank’s key interest rates by 4 percent in 2020.
He added that Egypt will be the driver of economic growth in the region in FY2021/22, as it’s among the three top countries that will approach their pre-pandemic growth levels in the same fiscal year.
For the MENA region as a whole, Fitch expected its real GDP growth to come in at 3.3 percent in 2021, following an estimated contraction of 3.8 percent in 2020 driven by the COVID-19 outbreak and its related containment measures.