Egypt’s economic growth will slow to 3.1 percent in the fiscal year 2020/2021 that began this month due to the coronavirus pandemic down from 3.5 percent forecast, a Reuters poll showed on Tuesday.
Egypt’s economy saw a boost during the last three years by a surge in tourism, strong remittances from workers abroad and recently discovered natural gas fields.
However, since the coronavirus outbreak, tourism has collapsed and the price of gas has plummeted. In addition, the worker remittances have come under threat with the decline of oil revenues in Gulf Arab states, where many Egyptians are employed.
The government was expecting growth of 3.5 percent in the FY 20/21, which began in July, but growth could slow to 2 percent if the coronavirus crisis continues until the end of the year, said Planning Minister Hala al-Saeed in May.
The poll was conducted between July 7-20, and predicted Egypt’s gross domestic product (GDP) would recover in 2021/2022 to a 5-percent growth.
The International Monetary Fund (IMF) expected the Egyptian economy to grow by 5.9 percent in 2020, and the government imposed severe reforms, including a sharp devaluation of the currency, significant cuts in energy subsidies and implementation of value-added tax.
Many of the approximately 100 million Egyptians would face difficulties in providing necessities of life.
HC Securities’ research team indicated that Egypt’s GDP in the first half of 2020/21 is expected to be negatively affected by the COVID-19 outbreak in Egypt with tourism, private investment and consumption being the main components negatively affected.
“As we go into FY 21/22, we expect this negative effect to fade out and the economy to start capitalizing on the 2016-2019 economic reform,” they added.
The economists, polled by Reuters, expected Egypt’s annual urban consumer price inflation to slow to 7.0 percent in 20/21, down from 7.5 percent expected in the previous poll.
They also predicted inflation would remain unchanged at 7.0 percent in 21/22.
Speaking to Reuters, economist at NKC African Economics, Callee Davis noted that although the economy is slowly reopening, domestic demand conditions will likely remain subdued going forward as salaries are reduced and workers are laid off amid the economic downturn.
