Back to the complete issue
Thursday, 26 March 2020

Covid-19 could cause Egypt’s GDP to shrink 1.3% this year -Capital Economics

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.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Etisalat Misr (tax ID: 235-071-579), the leading telecoms provider in Egypt; and Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt.