Economic growth in Egypt is expected to accelerate in 2018, according to Bloomberg Economics’ Chief Middle East Economist Ziad Daoud.
Daoud said that Egypt’s economy took a battering in 2011, with annual growth declining to 3.1 per cent in 2011-2016 from an average of 6.2 per cent in 2005-2010. “As the bulk of the International Monetary Fund adjustments have already taken place, we expect growth to pick up this year.”
He sees four tailwinds supporting growth in Egypt. First is declining inflation rates. Second are the expected lower interest rates, which “should boost growth through faster expansion in consumption and investment.”
Tourism is also set to recover, with more tourists arriving and staying longer.
The fourth tailwind is the increased natural gas production domestically. “Egypt has begun production from Zohr, a supergiant gas field. Production is expected to reach 1.7 billion cubic feet per day by June 2018 before rising to 2.7 billion cubic feet per day by the end of 2019. This could make Egypt self-sufficient in gas and may even help the country export it in the future,” he said.
“The story of Egypt is positive in the short term. However, most of the factors behind the expected recovery are temporary, and as these fade or reach their limit, Egypt will need to find new drivers for growth,” he added.