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Egypt's growth to pick up to 4.9% in FY 2021/22: EBRD Egyptian economy is moving towards recovery, EBRD's report confirms reforms success in maintaining sustainable growth, says Al-Mashat
Egypt's economic growth is expected to pick up to 4.9 % in the fiscal year (FY) 2021/22, according to the latest Regional Economic Prospects report, published by the European Bank for Reconstruction and Development (EBRD). The growth will be sustained by the boom in the telecommunications sector as well as the pick-up in private consumption and investment and the return of foreign direct investment. EBRD report indicated that the Egyptian economic growth slowed from 3.6% to 3.3% in the FY 2020/21. This slowdown comes on the back of sluggish manufacturing activity and weak tourism that offset economic activities of wholesale and retail trade, construction, agriculture and telecommunication sectors. Meanwhile, inflation slowed to 4.5% in the same fiscal year, below the central bank's target and started increasing in July – September 2021, averaging 5.9% year-on-year, driven by food and beverages price increases. However, EBRD believes that risks include a slow uptake of vaccination and a weak outlook in the tourism sector given a probable global delay in tourism recovery. The EBRD raised the economic growth in the southern and eastern Mediterranean (SEMED) region to 4.2% in 2021. The bank indicated that the recovery in economic activity has started in most countries of the SEMED region. It added that recovery is mainly driven by a rebound of agriculture and telecommunication as well as limited growth in tourism and exports. The future economic rebound in EBRD's regions will depend on the strength of the global recovery, the progress of the vaccination rollout, political developments and the implementation of business environment reforms. The EBRD report cites increasing competition, improving governance, combating corruption, advancing digitalisation and promoting inclusion as key steps to attract investors. In 2022, output in the SEMED region is expected to grow by 4.4%, reflecting a strong pick-up in economic activity, notably in Egypt and Morocco. Commenting on the EBRD forecast, Rania Al-Mashat, Minister of International Cooperation and Governor of Egypt at the EBRD, said that the positive expectations in the report on the Egyptian economy confirm Egypt's ability to move forward towards achieving recovery from the repercussions of the coronavirus pandemic. Al-Mashat added that the report also reflects the success of government reforms to maintain sustainable growth and enhance the Egyptian economy's ability to quickly recover from the repercussions of the pandemic. The Minister of International Cooperation stated that the EBRD expected that the Egyptian economy would lead the recovery in the Southern and Eastern Mediterranean region. She explained that the economic reforms that the state has adopted since 2016, and then the structural reforms that it is beginning to complete through the second reform plan recently announced by the government, enhance the ability of the Egyptian economy to achieve a comprehensive and sustainable recovery. Minister Al-Mashat added that these reforms confirm that the Egyptian government is taking reform as a continuous approach to maintaining the strength of Egypt's economy and its regional and international standing. The Minister of International Cooperation indicated that the government is working at the same time to take measures that enable it to achieve sustainable and green economic growth. Al-Mashat touched on the efforts of the Ministry of International Cooperation, through the integration of work between all ministries and government agencies, to enhance these reforms and procedures, by providing soft development funds as well as the necessary technical support. She indicated that the World Bank recently agreed to finance development policies for Egypt with a value of $360m, to support the second wave of structural reforms. Al-Mashat added that other multilateral and bilateral development partners are also financing many major projects that promote climate action such as the world's largest sewage treatment plant in Bahr Al-Baqar, smart transportation projects, and many projects in vital sectors.
