Egypt’s economic growth will accelerate to reach 5.6% in the fiscal year (FY) 2018/19, and on an annual basis of 5.7% in 2019, as investment is supported by reforms which strengthen the business climate and as private consumption picks up, according to the World Bank (WB) in its ‘Darkening Skies’ report.
The WB explained that Egypt achieved a growth rate of 5.3% in the past FY, due to the recovery witnessed in the tourism and natural-gas activity, noting that Egypt’s unemployment rate has generally decreased.
Notably, economic growth rose from 4.2% to 5.3% during the FY 2017/18, while unemployment rate declined from 12% to 9.9% during the last FY, according to the CAPMAS.
Egypt began a three-year International Monetary Fund $12bn loan programme in late 2016, agreeing to tough reforms, including a significant cut in energy subsidies, new taxes, and the liberalisation of the exchange rate in an effort to repatriate the country’s investors after the 2011 uprising.
“Headline inflation in Egypt remains near its 2018-end target level of 13%, despite edging up recently. Core inflation has been contained and the Central Bank of Egypt has conducted two policy rate cuts in 2018, despite tighter external financing conditions,” the report stated.
On a global base, the WB forecasts that the global economic growth will slow down to reach 2.9% in 2019, from a downwardly revised 3% in 2018 amid rising downside risks.
The WB further explained that the outlook for the global economy “has darkened” as global financing conditions have tightened, trade tensions have intensified, and some large emerging markets and developing economies experienced significant financial market stress.
Notably, this would be the second straight year of a slowing growth, as the global economy reached 3% last year, from 3.1% in 2017.