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Egypt’s economy to grow 5% in FY 2021/2022

Egypt’s economy to grow 5% in FY 2021/2022

ArabFinance: The Egyptian economy is expected to grow by 5% during the fiscal year (FY) 2021/2022, according to a Reuters survey of analysts and economists. 

The figure is the same as expected by analysts in a similar poll by the newswire in April, but is slightly below the 5.4% targeted by the government and the 5.2% forecast by the International Monetary Fund (IMF).

The government expects the economy to have grown by 2.8% in the previous fiscal year, exactly half the rate achieved in FY 2018/2019, as the pandemic hit the local economy and caused global disruption.

The pandemic caused tourism to collapse in March 2020 and other parts of the economy to slow, as Egypt maintained a large trade deficit, which rose 9% to $30.6 billion in July 2020-March 2021 compared to the year prior.

Allen Sandeep of Naeem Brokerage said Egypt's high trade deficit was partly a result of lower tourism revenues.

"The hope is that non-oil foreign direct investment picks up, local industry, local manufacturing takes over, and then you have a substitution for imports," Sandeep said.

Inflation was forecast at 6.0% in the fiscal year that ends in June, down slightly from an expectation of 6.4% three months ago. The headline price index is seen at 6.8% in the 2022/2023 fiscal year, revised up from an April projection of 6.2%.

Inflation has slowed as inventories have piled up after the market was throttled by supply chain disruptions last year due to the pandemic. Lower household consumption has also led to lower inflation.

"Now, if we see this COVID dragging on and tourism being quite weak ... there will be a time when we cannot go on borrowing," Sandeep said, adding that Egypt already pays foreign debt investors a large premium over its central bank rates.

 

 

 

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