Egypt to Increase GDP Growth to 5.4%

A factory employee carries cloth in a thread spinning factory in Cairo, Egypt July 5, 2018. REUTERS/Mohamed Abd El Ghany
A factory employee carries cloth in a thread spinning factory in Cairo, Egypt July 5, 2018. REUTERS/Mohamed Abd El Ghany
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Egypt to Increase GDP Growth to 5.4%

A factory employee carries cloth in a thread spinning factory in Cairo, Egypt July 5, 2018. REUTERS/Mohamed Abd El Ghany
A factory employee carries cloth in a thread spinning factory in Cairo, Egypt July 5, 2018. REUTERS/Mohamed Abd El Ghany

Egypt’s Minister of Finance Mohamed Maait said that the country aims to reduce the budget deficit to 6.7 percent and increase the GDP growth to 5.4 percent.

On the sidelines of the 2021 International Monetary Fund and World Bank fall meetings, the minister said that the government adopts a financial policy balancing between maintaining financial stability, supporting manufacturing and export activities, and strengthening social protection networks.

During the fiscal year 2020/2021, Egypt posted a gross domestic product growth of 3.3 percent, a primary surplus of 1.45 percent of GDP, and an overall budget deficit of 7.4 percent, according to the minister.

For the current fiscal year, the government targets to achieve a GDP growth of 5.4 percent, a primary surplus of 1.5 percent, and an overall budget deficit of 6.7 percent.

Egypt's government debt to the GDP reached 91 percent at the end of the past year, and the purpose is to reduce it to less than 90 percent during the current fiscal year, Maait added.

In another context, Egypt's oil minister said on Sunday that foreign investments in the sector fell 26.02% to $5.4 billion in the financial year 2020-21, versus $7.3 billion a year earlier.

"The coronavirus crisis led to a slowdown in investments from international oil companies worldwide," Tarek El Molla said in a speech to the Egyptian Petroleum Association.

Molla said that Egypt's arrears to foreign oil firms decreased to $845 million by the end of the financial year 2020-2021, from $850 million a year earlier.



US Involvement in Iran-Israel Conflict Raises Fears of Strait of Hormuz Closure

A general view of the Strait of Hormuz (Reuters)
A general view of the Strait of Hormuz (Reuters)
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US Involvement in Iran-Israel Conflict Raises Fears of Strait of Hormuz Closure

A general view of the Strait of Hormuz (Reuters)
A general view of the Strait of Hormuz (Reuters)

As the conflict between Iran and Israel intensifies, experts warn that direct US involvement could trigger a dangerous escalation, most notably, the closure of the Strait of Hormuz, a critical global energy chokepoint.

If Iran were to follow through on this long-standing threat, the consequences would be severe, cutting off roughly 20% of the world’s oil exports and 30% of global natural gas shipments.

Russian strategic analyst Andrey Ontikov told Asharq Al-Awsat that fears remain real and growing, particularly if the war expands.

If the United States is drawn into the war alongside Israel, the likelihood of Iran moving to close the Strait of Hormuz becomes the most serious and effective threat, he said.

Ontikov explained that such a move would paralyze global energy flows from the Gulf, sending oil and gas prices soaring and inflicting major economic damage on both exporting and importing nations.

The resulting disruption would directly affect international shipping, raise transport and insurance costs, and cause energy prices to spike, further straining already fragile global supply chains, he added.

He also warned that broader geopolitical implications are at stake. A regional war involving the Strait of Hormuz could jeopardize key trade corridors, including China’s Belt and Road Initiative and Russia’s North-South transport corridor.

That would have a direct economic impact on both Beijing and Moscow, forcing countries to look urgently for alternative trade routes, Ontikov said.

Oil prices are already rising, though Ontikov believes that if tensions ease, the global economic impact could be contained. However, a prolonged or widened war would paint a far more troubling picture.

Saudi economic expert Dr. Ibrahim Alomar, head of Sharah Consulting, echoed these concerns.

“If the conflict stays limited, the effects may include a temporary $10–$20 increase in oil prices and limited disruption to financial and shipping markets,” he said. “But a broader war could push oil prices above $120, causing inflation and a sharp global economic slowdown.”

Alomar warned that in the worst-case scenario - where the Strait of Hormuz is fully closed - oil prices could skyrocket past $200, triggering hyperinflation, severe recession, and a collapse in global financial markets.

“Such a scenario could ultimately reshape the global economic system, depending on who emerges least damaged from the crisis,” he concluded.