S&P sees Egypt’s real GDP growth slowing to 2.8% this year amid coronavirus

Rating agency S&P Global expects Egypt’s real GDP growth to slow to 2.8 percent in the current financial year and 0.1 percent the following year, due largely to the ongoing coronavirus pandemic crisis.

In its report released on Friday, S&P said “the ongoing health crisis, partial lockdown in Egypt, and external developments will constrain economic output.

“We expect a significant slowdown in real GDP growth to 2.8 percent in the current fiscal year and 0.1 percent in fiscal 2021 (representing a contraction of 1 percent during calendar year 2020), from 5.6 percent in fiscal 2019.”

The rating agency said tourism was on a promising rebound, as it made up about 12 percent of GDP and 10 percent of total employment, until recently, the sector was severely affected by the ongoing crisis.

“Growing domestic natural gas production had allowed Egypt to become self-sufficient and a net exporter of gas. However, the sector is showing signs of deceleration owing to the COVID-19 pandemic and slower global economic activity.”

S&P also said the prolonged weakness in global oil and gas prices could affect further investment in the Egyptian sector.

Nonetheless, the rating agency said it expects a small economic recovery from the second half of financial year 2021, supported by “a revival in consumption and public and private investment.”

“Ongoing efforts by the government to improve the business operating environment, such as a new public procurement law, industrial land allocation mechanism, export promotion measures, and the privatisation of state-owned enterprises could boost private sector activity in the medium term.”