Egypt on track to be only country in EBRD’s footprint to grow this year
Egypt on track to be only country in EBRD’s footprint to grow this year, investor sees economy expanding at a 5% clip next year. Covid-19 pushed up unemployment and forced many family businesses to close at least temporarily, but Egypt’s economy is still on track to grow at a 2% clip in 2020 and rebound to 5% growth next year. That makes Egypt “the only economy across all of the EBRD regions likely to escape recession in the 2020 calendar year … supported partly by large public construction projects and a boom in the telecommunications sector,” the European Bank for Reconstruction and Development said in a statement announcing it has revised its projections through 2021.
Egypt had been growing at 5.4% pace heading into covid, but the economy was hobbled by a partial lockdown and now faces challenges including “weak outlook in the tourism sector, disruptions in global value chains, weaker demand from trading partners, and the slowdown in foreign direct investment.”
Egypt is bouncing back from covid-induced unemployment and the closure of family businesses, EBRD says, based on a survey of 40k adults and nearly 2k SMEs in more than a dozen countries across its footprint. Some 23% of Egyptians who responded to the survey reported having lost their jobs during the pandemic while a third of family businesses closed at least temporarily. Government figures show unemployment rose to a two-year high of 9.6% in the second quarter as the government’s lockdown measures forced businesses across the country to shutter. Analysts have argued that national megaprojects helped cushion the blow of covid-19 on the Egyptian economy, helped by a stimulus program coordinated between the CBE and the Madbouly government.
IN OTHER NEWS FROM EM: The threat of sovereign bankruptcies in emerging economies will continue to mount unless the G20 extends its debt relief measures for low-income countries introduced earlier this year into 2021, IMF Managing Director Kristalina Georgieva said in a blog post on Thursday. Some nations are beginning to feel the crunch, with crisis-stricken Lebanon initiating a restructuring process, Argentina and Ecuador already reaching restructuring agreements with their bondholders, and Zambia and Rwanda warning that they may not be able to meet obligations to their international creditors.