Growth of the Egyptian economy will continue to accelerate in FY 2021-2022, expanding at a 5.1% clip before climbing to 5.5% in the following two years as the country continues to recover from the covid-19 pandemic, according to a Reuters poll of analysts. The economy grew 3.3% in FY 2020-2021, according to preliminary figures released last month.

This is slightly below government estimates, which see GDP clocking in at 5.4% by the end of the fiscal year in June 2022. A similar Reuters poll in July predicted 5% growth during the year, while the IMF recently said it expects Egypt to grow 5.2%. That’s down 0.5 percentage points from its 5.7% forecast in April.

Growth in the third and fourth quarters of 2021 will likely fall to “low single digits” due to the base effect, Renaissance Capital said in a note last week. Annual GDP growth came in at 7.7% during 4Q FY 2020-2021 versus -1.7% in the same period a year earlier.

An unbalanced recovery? Economic growth in the second quarter was fuelled by the hospitality sector, which RenCap said accounted for almost 60% of output. Activity in the sector increased fivefold from the same quarter last year, when the government’s lockdown measures brought travel to a halt. Meanwhile, other sectors grew at a more “pedestrian” pace, “implying the economy is still weak,” RenCap said. Manufacturing — Egypt’s biggest economic sector — grew 15.9% y-o-y and extractives were up 6.5%.

Tourism is improving: Central bank data showed earlier this month that tourism revenues rose to USD 1.75 bn during the final quarter of FY 2020-2021, up from USD 1.3 bn in 3Q and USD 305 mn in 4Q FY 2019-2020.

“We expect consumption growth to pick up from a low base post-COVID and public investment to remain strong this year … What will be critical to see is if this growth is sustained in 2022/23, by when the pandemic effects should hopefully subside substantially,” Allen Sandeep of Naeem Brokerage told Reuters.

Inflation to inch up over next three years: Annual urban inflation will average 6% during FY 2021-2022 before climbing to 6.4% in FY 2022-2023 and 7.0% in FY 2023-2024, according to the poll. Rising food and energy prices has been driving up the headline rate of inflation in recent months, hitting a 20-month high of 6.6% in September from 5.7% in August. RenCap has also revised upwards its inflation forecast, now pencilling in 6.5% by the end of the current fiscal year from 5.6% previously.