World Bank expects Egypt economy to grow 5 percent in 2018

The World Bank (WB) raised its forecast for the growth rate of the Egyptian economy to grow 5 percent in the 2017/2018 fiscal year from 4.9 percent in its latest report on the Middle East and North Africa.

Real GDP is forecast to grow by 5 percent in FY2018, and to increase gradually to 5.8 percent by FY2020.

As reform momentum is sustained, economic activity is expected to improve and imbalances are projected to narrow further.

Growth is expected to be driven by resilient private consumption and investment, in addition to a gradual pickup in exports (notably from tourism and gas.

The inflation rate is set to record 14 percent in the financial year 2019 decreasing to 12 percent in FY 2020.

The budget deficit is expected to narrow to 9.8 percent of GDP in FY2018. This is slightly higher than initially-budgeted, due to larger interest payments, higher international oil prices, and larger-than-budgeted exchange rates.

The fiscal consolidation program is expected to rely on revenue mobilization, in particular the increase in VAT receipts, in addition to energy subsidy reforms, it added.

The current account deficit is expected to narrow to 4.9 percent of GDP in FY18, from 6.6 percent of GDP in FY17, the report read.

Recent increases in allowances of the main social programs have helped weather the effects of inflation, it said.