Egypt to Miss GDP Growth Target This Fiscal Year, El-Araby Says

Egypt’s economy is likely to grow less than the government’s target of at least 3% because of political turmoil, Planning and International Cooperation Minister Ashraf El-Araby said.

El-Araby said in an interview in Cairo today he hopes that gross domestic product growth will exceed 2 % in the fiscal year that ends in June. The average estimate of 16 economists on Bloomberg is for 2.8 % growth in 2014. Finance Minister Hany Qadry said this month that the economy grew 1.4 % in the second quarter of the fiscal year.

El-Araby’s forecast is “a factor of lower-than-expected investment growth due to instability and security issues,” Mona Mansour, chief economist at Cairo-based investment bank CI Capital, said by phone. “It all depends on the ability of the current government to implement changes that encourage investments.”

The Egyptian economy has been hurt by political unrest and a wave of militant attacks since the military ousted Islamist President Mohamed Morsi in July.

The government announced plans to boost public spending and the central bank cut its key interest rates three times in the second half of 2013 in a bid to spur growth.

Source: Bloomberg