FILE - The European Bank for Reconstruction and Development (EBRD)
CAIRO – 9 May 2018: The European Bank for Reconstruction and Development (EBRD) expects growth in Egypt to record 5.3 percent in 2018 and 5.5 percent in 2019, up from 4.3 percent in 2016 and 4.2 percent in 2017, with an increase of 0.8 percent.
This came at the Bank’s new Regional Economic Prospects report that includes the predictions of the economic trends in 37 economies across three continents, from Estonia to Egypt and from Morocco to Mongolia.
The report expected a growth rate of 3.3 percent in 2018 in all 37 countries to record 3.2 percent in 2019.
“The economic momentum remained strong but that growth might now have peaked,” the report clarified.
The EBRD’s Chief Economist, Sergei Guriev, said that the lower productivity growth reflected the fact that most EBRD economies had exhausted the growth levers that had delivered rapid expansion until the onset of the crisis.
“In order to develop new sources of growth, these countries need to carry out structural reforms of product, capital and labour markets. They need to improve governance, promote integration into the global economy, and invest in human capital and sustainable infrastructure,” Guriev said.
“The good news is that the current recovery provides a solid window of opportunity for such reforms,” he added.
The bank depended on several risks to determine its forecasts, including: corporate debt levels, stock market levels, persistent security threats and geopolitical tensions as well as a high degree of concentration of sources of global growth.
Planning Minister Hala el-Saeed said that Egypt’s growth rate pushed the government and international organizations to raise their expectations of the economic growth to 5.3 percent currently, up from 4.6 percent in 2017/2018 before implementing the reform program.
Egypt had embarked on a bold economic reform program that included the introduction of taxes, such as the value-added tax (VAT), and cutting energy subsidies, all with the aim of trimming the budget deficit.
The state floated its currency in November 2016; losing 50 percent of its value, as part of the economic reform program.
She added that Egypt is targeting a growth rate of 5.8 percent, to be accelerated gradually to 8 percent by 2021/2022.
HC Securities & Investment (HC) expects Egypt’s gross domestic product (GDP) to reach 5.3 percent in 2017/2018 and 6 percent in 2018/2019, reaching 6.2 percent in 2019/2020.
The International Monetary Fund expected earlier that Egypt will record a GDP of 5.2 percent in the current fiscal year and to reach 5.5 percent next year, with an increase of 0.7 percent and 0.2 percent, respectively.
The IMF further anticipated the GDP to record 6 percent in 2023.
The IMF’s executive board approved in November 2016 a three-year Extended Fund Facility (EFT) loan to Egypt worth $12 billion to support its economic reform program.