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Tuesday, 20 October 2020

Egypt’s economy to achieve pre-pandemic growth in FY2021-2022 -World Bank

Egypt’s economy will return to pre-pandemic growth rates in FY2021-2022 -World Bank: The World Bank is the latest addition to a growing chorus of voices expecting Egypt to be the only country in the MENA region to record positive economic growth amid the pandemic. In its latest MENA economic update, the bank said it sees real GDP growing at a 2.3% clip this fiscal year, which ends on 30 June 2021 (a downward revision from the 3.7% growth the bank forecasted for the fiscal year in an April report). However, the economy is still expected to quickly rebound to pre-pandemic levels in FY2021-2022, during which the economy is predicted to eke out a 5.8% real growth rate.

READ THE REPORT: Tap or click here for the landing page or download directly here (pdf). You can also check out a press release on the report here.

If it wasn’t for covid-19, Egypt’s economy would have expanded by 5.5% in FY2019-2020 and 5.9% in FY2020-2021, according to forecasts the bank made before the outbreak. This means the pandemic-induced slowdown effectively slashed Egypt’s economic growth by half. Still, the slowdown was less sharp than that of the overall MENA economy, which is expected to contract 5.2% this year and grow at 1.9% in 2021, according to the report.

…and on poverty rates: The rate of individuals making less than USD 3.2 a day in Egypt is forecast to rise to 30.5% by the end of 2020, up 6.4 percentage points from projections of 24.1% before the pandemic. The proportion of those making USD 5.5 or less, meanwhile, could increase to 73.8% from 68.9% in a year without covid as poor households struggled to continue working amid lockdown measures, according to World Bank calculations. Overall, 41% of the workers interviewed in a survey said they stopped working altogether sometime during the pandemic, but 9% of the country’s households were beneficiaries of cash transfer programs Takaful and Karama, which the government expanded since March, the bank said. In a census by state statistics agency Capmas in June, more than 26% of surveyed households said they were not working and 55.7% reported working fewer hours per week since the outbreak.

Egypt got brownie points for its response to the pandemic, including measures from the CBE (such as expanding industry stimulus), the government tapping debt markets with May’s USD 5 bn eurobond issuance, and officials ensuring a sufficient supply of food amid the pandemic (here and here). The bank also took note of GAFI’s recent approval of 30 new projects to be set up in CPC Egypt for Industrial Development’s investment zone and authorities encouraging the manufacture of medical supplies and food commodities.

Background: We had more yesterday on what other global institutions, including the IMF, are penciling in for Egypt’s near-term economic growth.

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