Fitch says Egypt’s growth seen at 3.4% in 2020/21

Fitch said on Thursday Egypt’s growth is seen at 3.4 percent for the current financial  year 2020/2021 despite vulnerabilities.

The rating agency made the announcement during a virtual panel to release its “Country Deep-Dives, A Closer Look At Growth Prospects In the GCC States and Egypt” report.

At the panel, Fitch expected that weak prospects for tourism, investment, and remittance inflows would continue to dampen Egypt’s growth performance.

Both the International Monetary Fund’s (IMF) loan and eurobond issuance are expected to support Egypt’s external position, though risks of renewed volatility persist, it said.

In May, Egypt received a 2.4 billion financial assistance from the IMF under the rapid finance instrument to address the repercussions of the coronavirus pandemic.

In June, the IMF gave Egypt the first tranche worth $2 billion of a $5.2 billion loan under a 12-month stand-by agreement. The remainder is set to be disbursed over two reviews in December 2020 and June 2021.

According to Fitch, mobility data indicates that the worst phase of the pandemic is over and that retail, recreation, grocery, pharmacy, transit stations, and work places have started to rebound after a deep reduction in May.

Purchasing manager index (PMI) and Google mobility data point to widespread disruption to local activity in the second quarter of the current year, though conditions are now easing, the agency added.

An aggregate real GDP growth of 3.5 percent is forecast for the Middle East and North Africa (MENA) region in 2021, following a contraction of 5.1 percent in 2020, Fitch stated, stressing that the global economy will rebound in 2021, while MENA is expected to underperform.