The World Bank (WB) has downgraded its forecasts for Egypt’s real GDP growth in FY2021/2022 to 4.5 percent, down from 5.8 percent it projected in October, while it maintains the country’s real GDP growth projection during FY2020/2021 at 2.3 percent.

According to its global economic prospects report, issued on Tuesday, the WB expected Egypt’s real GDP growth to accelerate to 5.5 percent in FY2021/22, which begins in July.

MENA’s growth to accelerate in 2021

On Middle East and North Africa (MENA) forecasts, the report expected the region’s economic activity to grow by 2.4 percent in 2021, which is stronger than initially forecast, but below the previous decade average—ending 2019.

The report projected MENA’s economic growth to advance to 3.2 percent.

The report said that MENA should benefit from the recent rebound in oil prices, stronger external demand, and less economic disruptions from COVID-19 outbreaks.

“As vaccinations rise, mobility restrictions ease, oil production cuts taper, and damage to balance sheets reverse,” the report urged.

MENA’s economic outlook is uncertain and depends on the course of the pandemic and vaccination availability and take-up, according to the report.

For the region’s oil importers, which include Egypt, the pandemic is expected to continue to be a drag on their economic growth.

Citing Egypt, the report noted that the country’s forecasts in FY2020/21 reflect retreat in tourism, manufacturing, and oil and gas extraction due to the pandemic, before strengthening again in FY 2021/22.

Risks ahead

Regarding possible risks to the region, the report said they could include the resurgence of COVID-19, delays in vaccination rollout, weaker oil prices in the context of limited economic diversification, higher agricultural prices and food insecurity, as well as conflict and social unrest.

“Limited economic diversification continues to present risks as oil demand is expected to remain below pre-pandemic levels through 2023. Social unrest and conflict are recurring downside risks to region. The intersection of higher food prices, fragility and conflict, political risk and resurgent outbreaks of COVID-19 pose significant economic and social risks to the region,” the report demonstrated.

On recent developments in the region, the report said most of MENA’s countries experienced their sharpest contractions in decades in 2020 owing to the pandemic, with lingering damage to both transport and tourism sectors, in particular.

However, the economic impacts of rising infections have so far been limited in the region, according to the report.

Oil price increase will support MENA’S recovery

Concerning oil prices, the report expected it to average $62 per barrel (pbl) in 2021 and 2022, which will support the region’s recovery.

Emerging markets and developing economies still straggling

Regarding emerging markets and developing economies, the report said that they continue to grapple with the pandemic and its repercussions.

However, emerging markets and developing economies are expected to expand 6 percent during 2021, supported by higher demand and elevated commodity prices, but the recovery in many countries is being held back by a resurgence of infections and lagging vaccination progress, as well as the withdrawal of policy support in some instances.

“Excluding China, the rebound in this group of countries is anticipated to be a more modest 4.4 percent. The recovery among emerging markets and developing economies is forecast to moderate to 4.7 percent in 2022. Even so, gains in this group of economies are not sufficient to recoup losses experienced during the 2020 recession, and output in 2022 is expected to be 4.1 percent below pre-pandemic projections,” the report noted.

Per capita income in many emerging markets and developing economies is also expected to remain below pre-pandemic levels, and losses are expected to worsen outcomes associated with health, education and living standards, according to the report.

Global growth to expand in 2021

On the global level, the report projected economic growth to expand to 5.6 percent in 2021, the fastest post-recession pace in 80 years.

Also, despite the recovery, global output will be about 2 percent below pre-pandemic projections by the end of 2021, according to the report.

The report expected that per capita income losses to not recover by 2022 for about two-thirds of emerging market and developing economies.

“Among low-income economies, where vaccination has lagged, the effects of the pandemic have reversed poverty reduction gains and aggravated insecurity and other long-standing challenges,” said the report.

Since the onset of the pandemic, the World Bank Group has committed over $125 billion to fight its health and the socio-economic impacts, the largest crisis response in its history, helping more than 100 countries.

It is also providing $12 billion to help low- and middle-income countries purchase and roll out COVID-19 vaccines, tests, and treatments.