IMF revises up Egypt’s real GDP growth projection in 2021 to 3.3%, maintains 2022’s outlook at 5.2%

Doaa A.Moneim , Tuesday 12 Oct 2021

The International Monetary Fund (IMF) has revised up Egypt’s real GDP growth projections for 2021 to 3.3 percent while maintaining its expectation for 2022’s GDP growth for the country at 5.2 percent.

File Photo: The International Monetary Fund (IMF) logo is seen outside the headquarters building in Washington, United States, taken on September 4, 2018. REUTERS

In its updated report on the world’s economic outlook, issued on Tuesday amid the ongoing IMF and World Bank Group’s annual meetings, the IMF projected Egypt’s inflation rate to accelerate to 6.3 percent in 2022 while expecting the rate to reach 4.5 percent in 2021.

Additionally, the report expected the country’s current account balance to diminish to 3.9 percent in 2021 and down to 3.7 percent in 2022.

In terms of unemployment, the report expects it to accelerate to 9.3 percent in 2021 before declining slightly to 9.2 percent in 2022, surpassing 2020’s 8.3 percent.

Regarding the global economy outlook, the report lowered its projections in 2021 by 0.1 percent to 5.9 percent in 2021 while maintaining its 2022 projections at 4.9 percent in 2022.

For the Middle East and Central Asia region, the report expected its real GDP to grow by 4.1 percent in 2021 and 2022 following its slowdown to 2.8 percent in 2020.

“The downward revision for 2021 reflects a downgrade for advanced economies — in part due to supply disruptions — and for low-income developing countries, largely due to worsening pandemic dynamics. This is partially offset by stronger near-term prospects among some commodity-exporting emerging markets and developing economies. Employment is generally expected to continue lagging the recovery in output,” the report explained.

Beyond 2022, global growth is expected to moderate to about 3.3 percent over the medium term, according to the report.

On emerging markets and developing economies, the report anticipated persistent output losses in this group owing to slower vaccine rollouts and generally less policy support compared to advanced economies.

The report also highlighted the notable increase in food prices globally, noting that the IMF’s food and beverage price index rose by 11.1 percent between February and August, peaking in May 2021 at the highest price in real terms since the 2010–2011 world food price crisis.

It also warned that continued increases in global food producer prices pose upside risks to consumer food price inflation, especially in emerging markets, where the pass-through from producer to consumer prices is higher than in advanced economies (26 percent versus 14 percent).

On the global price for oil, the report estimated it rose by 13.9 percent between February and August 2021 due to the rapid economic recovery in advanced economies.

The report expects the price to reach $65.7 per barrel in 2021 — 59 percent higher than the 2020 average — and to drop to $56.3 in 2026 in light of OPEC+’s (Organization of the Petroleum Exporting Countries, plus Russia and other non-OPEC oil exporters) decision — taken in July — to gradually phase out their remaining 5.8 million barrels per day production curbs by September 2022.

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