EBRD: Egypt only economy likely to escape coronavirus-linked recession in 2020

Egypt is the only economy across all of the European Bank for Reconstruction and Development’s (EBRD) regions to escape recession in the 2020 calendar year, the bank said in a report on Thursday.

EBRD projected Egypt’s economy to have a growth of 2.0 percent in 2020 supported partly by large public construction projects and a boom in the telecommunications sector.

The bank has wound back forecasts for the emerging economies where it invests, after measures to contain the impact of the coronavirus lasted for longer than previously anticipated. It is now forecasting an overall contraction across its economies of 3.9 percent this year, and a return to growth next year of 3.6 percent.

The previous forecasts published in May had projected a drop of 3.5 percent for 2020 and a stronger recovery of 4.8 percent in 2021.

“Output in the EBRD regions contracted sharply in the second quarter of 2020 by around 8.2 percent year on year. In many economies the contraction was larger than declines seen during the global financial crisis.” EBRD’s Chief Economist Beata Javorcik said.

“The speed of recovery is expected to be similar to the one observed in the aftermath of that crisis, with pre-pandemic levels of GDP returning towards the end of 2021.” Javorcik added.

EBRD economies have witnessed pressure on supply and demand because of domestic measures to contain the pandemic, while external shocks have included low commodity prices, shrinking exports, a collapse in tourism and drops in remittances.