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Egypt Targets 5.7% Growth in Next FY

A general view of central Cairo, Egypt. (Reuters file photo)
A general view of central Cairo, Egypt. (Reuters file photo)
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Egypt Targets 5.7% Growth in Next FY

A general view of central Cairo, Egypt. (Reuters file photo)
A general view of central Cairo, Egypt. (Reuters file photo)

Egypt will target economic growth of 5.7 percent and a primary surplus of 1.5 percent of GDP in the 2022-23 financial year, the finance ministry said on Tuesday.

The country is targeting an overall budget deficit of 6.1 percent in the next financial year, which begins in July.

The finance ministry added that the government raised its local wheat procurement price for the harvest beginning April 2022 by around EGP670 per ton from the price set a year prior as global wheat prices increased.

The ministry said Egypt, which is often the world's largest importer, allocated an additional EGP12 billion for wheat purchases in 2021 as global prices increased.

Meanwhile, Egyptian Petroleum Minister Tariq El-Molla said that Egypt expects to hold a bid round for oil and gas exploration before the end of June.

The ministry had said earlier that it targets $7 billion in direct foreign investment (FDI) for its oil and gas sector.

Molla was speaking at the American Chamber of Commerce forum on Monday to prepare for COP 27 under the title 'Building Momentum to COP27 of the United Nations: Enhancing Public-Private Cooperation on the Climate Challenge.'

He pointed out that the petroleum sector is currently implementing a national strategy to confront climate change and reduce emissions by 2050.

Egypt aims to reduce emissions in the energy field by expanding the uses of natural gas as a fuel and continuing its essential role as a low-emissions energy source during the transition period.

Molla explained that the energy subsidy reforms allowed allocations to be directed to the citizens entitled to it within the framework of initiatives to improve the standard of living.

He added that as a result of these reforms, Egypt's production of petroleum products increased by 30 percent from 2014 to 2020, which subsequently led to a decrease in carbon emissions.

Egypt's consumption of natural gas as a clean fuel rose 35 percent of the total consumption of fossil fuels during the same period.

The ministry plans to reduce the use of carbon by interacting with the initiatives of global partners and cooperating with the private sector and international companies to move towards the production of green hydrogen.

Molla pointed out that Egypt will continue to increase reliance on natural gas alternatives to some petroleum products.

He explained that natural gas is environmentally friendly and one of the essential options for the transition towards clean energy and reducing emissions.

Molla stressed the importance of natural gas as a transitional fuel in the transitional phase towards expanding the use of green energies and reaching zero emissions, which Egypt adopts in its current strategy by expanding reliance on natural gas.

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IMF Sees Steady Global Growth

FILED - 24 October 2024, US, Washington: The logo of the International Monetary Fund (IMF) is seen on the facade of the conference building on Pennsylvania Street. Photo: Soeren Stache/dpa
FILED - 24 October 2024, US, Washington: The logo of the International Monetary Fund (IMF) is seen on the facade of the conference building on Pennsylvania Street. Photo: Soeren Stache/dpa
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IMF Sees Steady Global Growth

FILED - 24 October 2024, US, Washington: The logo of the International Monetary Fund (IMF) is seen on the facade of the conference building on Pennsylvania Street. Photo: Soeren Stache/dpa
FILED - 24 October 2024, US, Washington: The logo of the International Monetary Fund (IMF) is seen on the facade of the conference building on Pennsylvania Street. Photo: Soeren Stache/dpa

The International Monetary Fund expects the world economy to grow a little faster and inflation to keep falling this year. But it warned that the outlook is clouded by President-elect Donald Trump’s promises to slash US taxes, impose tariffs on foreign goods, ease regulations on businesses and deport millions of immigrants working illegally in the United States.

The Washington-based lending agency expects the world economy to grow 3.3% this year and next, up from 3.2% in 2024. The growth is steady but unimpressive: From 2000 to 2019, the world economy grew faster – an average of 3.7% a year. The sluggish growth reflects the lingering effects of big global shocks, including the COVID-19 pandemic and Russia's invasion of Ukraine.

The IMF is a 191-nation lending organization that works to promote economic growth and financial stability and to reduce global poverty.

Global inflation, which had surged after the COVID-19 pandemic disrupted global supply chains and caused shortages and higher prices, is forecast to fall from 5.7% in 2024 to 4.2% this year and 3.5% in 2026.

But in a blog post that accompanied the release of the IMF’s latest World Economic Outlook report, the fund’s chief economist, Pierre-Olivier Gourinchas, wrote that the policies Trump has promised to introduce “are likely to push inflation higher in the near term,” The Associated Press reported.

Big tax cuts could overheat the US economy and inflation. Likewise, hefty tariffs on foreign products could at least temporarily push up prices and hurt exporting countries around the world. And mass deportations could cause restaurants, construction companies and other businesses to run short of workers, pushing up their costs and weighing on economic growth.

Gourinchas also wrote that Trump’s plans to slash regulations on business could “boost potential growth in the medium term if they remove red tape and stimulate innovation.’’ But he warned that “excessive deregulation could also weaken financial safeguards and increase financial vulnerabilities, putting the US economy on a dangerous boom-bust path.’’

Trump inherits a strong US economy. The IMF expects US growth to come in at 2.7% this year, a hefty half percentage point upgrade from the 2.2% it had forecast in October.

The American economy — the world's biggest — is proving resilient in the face of high interest rates, engineered by the Federal Reserve to fight inflation. The US is benefiting from a strong job market that gives consumers the confidence and financial wherewithal to keep spending, from strong gains in productivity and from an influx of immigrants that has eased labor shortages.

The US economy’s unexpectedly strong performance stands in sharp contrast to the advanced economies across the Atlantic Ocean. The IMF expects the 20 countries that share the euro currency to collectively grow just 1% this year, up from 0.8% in 2024 but down from the 1.2% it was expecting in October. “Headwinds,” Gourinchas wrote, “include weak momentum, especially in manufacturing, low consumer confidence, and the persistence of a negative energy price shock’’ caused by Russia’s invasion of Ukraine.

The Chinese economy, No. 2 in the world, is forecast to decelerate – from 4.8% last year to 4.6% in 2025 and 4.5% in 2026. A collapse in the Chinese housing market has undermined consumer confidence. If government doesn’t do enough to stimulate the economy with lower interest rates, stepped-up spending or tax cuts, China “is at risk of a debt-deflation stagnation trap,’’ Gourinchas warned, in which falling prices discourage consumers from spending (because they have an incentive to wait to get still better bargains) and make it more expensive for borrowers to repay loans.

The IMF forecasts came out a day after its sister agency, the World Bank, predicted global growth of 2.7% in 2025 and 2026, same as last year and 2023.

The bank, which makes loans and grants to poor countries, warned that the growth wasn’t sufficient to reduce poverty in low-income countries. The IMF’s global growth estimates tend to be higher than the World Bank’s because they give more weight to faster-growing developing countries.