Egypt is one of three MENA economies that will see GDP growth return to pre-covid levels in 2021, buoyed by expectations of a strong rebound in the oil and gas and tourism industries this year, Fitch Solutions analysts said at a webinar yesterday. “The Central Bank of Egypt’s (CBE) monetary easing of 400 bps last year, as well as expanded fiscal spending and well-executed stimulus policies, helped to cushion the economic blow of the pandemic,” MENA country risk analyst Selim Elbadri said.

Egypt’s GDP is expected to grow at a 2.9% clip in FY2020-2021, marking a slight downwards revision of the 3% Fitch predicted in January due to a bumpy vaccine rollout. “Vaccinations for priority populations are expected to run from 21 March to 21 Septmeber,” deputy head of country risk Julie Beckenstein said, noting that Egypt’s vaccine rollout is lagging behind regional peers such as Israel, Morocco, and the GCC.

Increased natgas production will be a key driver of economic growth: Fitch Solutions sees the country ramping up its output of natural gas to hit pre-covid production levels in FY2020-2021. Production is expected to plateau at these rates, with a marginal decline of 10% at most throughout FY2021-2022. That’s a steeper decline than the 4.5% dip in production Oil Ministry has penciled in for the upcoming fiscal year, with daily natural gas production expected to come in at 7.2 bcf/d, down from 7.45 bcf/d during the current fiscal year.

And a robust tourism sector recovery is expected to drive medium-term growth, with the economy expected to expand at a 5% clip in FY2021-2022, according to Elbadri. Some 500k tourists visited Egypt in 1Q2021, generating USD 600-800 mn in revenues, with some 2 mn tourists visiting the country in the nine months since commercial flights resumed following the initial wave of the virus. Tourism Minister Khaled El Anany recently said Egypt could see a return to pre-covid visitor numbers as early as fall 2022.

Israel and Qatar are also expected to be among MENA’s best-performing economies, with the latter leading the recovery in the GCC as the only Gulf nation to return to pre-covid GDP growth rates in 2021. The slowdown in the recovery of other regional economies was attributed to the contracting oil sector as a result of the OPEC+ mandated production cuts. But Fitch is optimistic that an OPEC+ agreement to gradually increase oil production from May to July as fuel demand rises will drive growth in GCC countries such as Saudi Arabia and the UAE, though likely not enough to return them to pre-pandemic growth rates, Elbadri said.