Egypt’s economy is expected to grow 5.0 percent in the financial year 2021-2022 that ends in June next year, a Reuters survey showed on Monday.
This figure is unchanged from analysts’ expectations in a similar poll three months ago and slightly below the government’s target of 5.4 percent.
Gross domestic product (GDP) of the Arab world’s most populous country was seen growing 5.5% in the fiscal year ending on June 30, 2023, the July 5-26 poll predicted.
The government has said it expected the economy to grow 2.8 percent in the 2020/2021 financial year despite the huge disruption across the global economy, retaining its position as one of the few emerging markets to achieve GDP growth despite the COVID-19 pandemic.
The pandemic caused tourism to decline in March 2020 and other parts of the economy to slow, as Egypt maintained a large trade deficit, which surged 9 percent to $30.6 billion in July 2020-March 2021 compared to the year prior.
Allen Sandeep of Naeem Brokerage told Reuters that 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 substitution for imports,” Sandeep said.
Inflation was forecast at 6.0 percent in the financial year that ends in June, down slightly from a prediction of 6.4 percent three months ago. The headline price index is seen at 6.8 percent in the 2022/2023 financial year, revised up from an April expectation of 6.2 percent.
Inflation rate has slowed as inventories have piled up after the market was throttled by supply chain disruptions last year due to the coronavirus pandemic. Lower household consumption has also led to witnessing 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, noting that Egypt already pays foreign debt investors a large premium over its central bank rates.