Covid-19 could cause Egypt’s GDP to shrink 1.3% this year, before bouncing back in 2021, says Capital Economics: Egypt could see its economy contract 1.3% in 2020 on the back of the covid-19 outbreak, said Jason Tuvey, senior EM economist at Capital Economics. The London-based research consultancy firm initially expected Egypt’s GDP to grow at a 6% clip this year. Egypt’s external position looks better than most of its regional peers, “but poor public finances limit the scope for financial stimulus,” Tuvey says.

Regionally, the picture isn’t much prettier: Saudi Arabia is the onlyMENA economy that Capital Economics doesn’t expect to shrink this year, and has actually revised its GDP growth forecast upwards to 2.0% from 1.3%. This forecast is driven entirely by an anticipated rise in oil output, Tuvey says, despite a collapse in oil prices. Lebanon is expected to be the worst-performing MENA economy this year, which could see its GDP shrink by a painful 12%, followed by Tunisia (-8.5%) and Jordan (-6.5%). As a whole, the MENA region is expected to see an average 1.3% decline in GDP in 2020. Capital Economics had initially forecasted average MENA GDP growth to come in at 2.2% this year.

On the bright side, the region could see a significant rebound in 2021. Capital Economics has revised its forecasts for 2021 GDP growth in Egypt to 7.8%, from an initial forecast of 5%. This would place Egypt as the region’s fastest-growing economy next year. The average GDP growth for the MENA region next year is now forecast at 4.9%, up from initial expectations of 2.2% growth.