Economists Predict Lower Egypt Growth

Egypt’s economy will grow 5.2% in the fiscal year that began in July, economists said in a Reuters poll, as Cairo pushes ahead with economic reforms that have strained millions of Egyptians living under the poverty line.

The reforms imposed under a 2016 IMF-backed austerity plan tied to a $12 billion loan program have revived economic growth in the Arab world’s most populous country following years of political turmoil.

The Reuters poll of 13 economists put expected growth at an average of 5.2% for the 2018/19 fiscal year, below a government projection of 5.8%. A median forecast of 12 respondents was for 5.5% growth in the 2019-20 fiscal year.

“Looking further ahead, Egypt’s commitment to the IMF reform program and the authorities’ ability to follow through with the difficult reforms will be key to unlocking Egypt’s growth potential,” said Nadene Johnson, an economist at NKC African Economics.

“The country has made significant progress under the IMF loan program thus far and therefore Egypt’s medium-term economic growth prospects remain strong,” she told Reuters.

The IMF maintained its previous 5.5% projection for Egypt’s GDP growth in the 2018-2019 fiscal year, driven mainly by a recovery in tourism and rising natural gas output.

Johnson said the economy still faced structural challenges that would require further reforms, including high unemployment, labor market inefficiencies and weak healthcare and education levels.

“Efforts to develop the private sector and reduce the role of the state will be essential to significantly reduce unemployment (especially amongst the youth),” she said.