Egypt's growth to slow sharply in 2020 to 0.5% due to COVID-19: EBRD

CAIRO – 14 May 2020: Egypt would hit a growth of 0.5 percent in 2020, compared to 5.6 percent in 2021, according to the European Bank for Reconstruction and Development (EBRD).

EBRD forecasted in a report Wednesday that Egypt’s growth will rebound to 5.2 percent in 2021.

the EBRD Regional Economic Prospects report noted that Egypt’s economy will slow sharply in 2020 due to the impact of coronavirus, noting that the Egyptian economy will avoid a recession.

The report revealed that the deceleration led by the Covid-19 pandemic reflects a slowdown in the tourism sector, disruptions in global value chains and a slowdown in demand from trading partners and in foreign direct investment.

“However, large public construction projects and the boom in the telecommunications sector have so far been factors supporting growth,” it added.

It referred that yhe main risks to the outlook arise from the need for a tougher lockdown if the spread of Covid-19 accelerates and from the negative outlook in Egypt’s main trading partners.

As yet, the number of COVID-19 cases in Egypt reached 10,413 patients and 556 deaths, according to the ministry’s official data. Meanwhile, the number of those who recovered from the virus registered 2,980 people.

As per the EBRD southern and eastern Mediterranean region, the report expected the negative impact of the coronavirus to be seen in the tourism sector, a decline in domestic demand due to containment measures, a fall in demand from the main trading partners and a slowdown in foreign direct investment.

On average, the economies of the region are expected to shrink by 0.8 per cent in 2020 before rebounding with growth of 4.8 per cent in 2021, according to the report.

Jordan, Morocco and Tunisia are expected to contract this year. Lebanon, which had already fallen into recession in 2018 and 2019, is likely to see an especially sharp fall of 11 per cent in 2020.

Economies across the EBRD regions may contract on average by 3.5 percent this year, with a rebound of 4.8 percent possible in 2021, the report said, warning that the projections are subject to “unprecedented uncertainty”.

The report assumed a modest impact of the crisis on the long‐term trajectory of economic output, with growth resuming towards the end of the third quarter, but potentially significant longer-term economic, political and social effects.

“If social distancing remains in place for much longer than anticipated, the recession may be much deeper, with the 2019 levels of output per capita not attained again for years to come,” the report said.

Across the EBRD regions, containment measures have affected domestic demand and supply. External shocks include a sharp drop in commodity prices, weighing on commodity exporters, disruption to global value chains, a collapse in tourism and a drop-in remittances.

The EBRD invests in emerging economies from central and eastern Europe through to Central Asia and the Middle East and North Africa.