IIF downgrades Egypt’s 2020 growth forecast to 2.7%: The Institute of International Finance (IIF) has revised downward its projection for Egypt’s GDP growth this year to 2.7% from 5.4% due to headwinds caused by the covid-19 outbreak.

Behind the dip: Lower economic growth will come on the back of a drop in tourism receipts, remittances and Suez Canal revenues, as well as a slowdown in trade and foreign direct investment, IIF suggested in a report published this week.

The projection is far less bleak than that of Capital Economics which said last week that the Egyptian economy could contract by 1.3% in 2020. The London-based research consultancy firm had initially expected GDP to grow 6% this year.

The banking system should come out of this relatively unscathed: “While the coronavirus outbreak is expected to hurt banks’ profitability, asset quality and credit growth, the banking is sound and should be able to withstand the crisis,” the report says.

MENA GDP is now forecast to contract this year by 0.3%, compared to its previous call that the region would grow at a 1.8% clip this year. The slide is expected to be led by trade, FDI, tourism flows, and remittances all taking a hit. Fiscal deficits will widen dramatically as a result of the pandemic, expanding to 8.8% of GDP compared to 3.7% before the outbreak. Nosediving oil prices will also place pressure on net oil exporters, with hydrocarbon earnings (which account for 11% of GDP) expected to fall USD 192 bn.