Egypt gained notable improvements in confidence, exports and manufacturing, according to the World Bank’s report in January, which highlighted 1.2% growth for 2014 in developing Middle East and North Africa countries.
The report, released every six months, however, added: “This modest upturn remains fragile, and output still languishes well below the region’s potential,” Anwal al Ghad reported Sunday.
The report highlighted the most prominent problems that need to be addressed by those countries, including unemployment, poverty and structural reforms.
The report added that different variables, including domestic exchange rate and demand pressures as well as the rise in VAT, have caused inflation rates to rise in some countries including Egypt.
In October 2014, Egypt witnessed a 0.7% increase in inflation between September and October 2014, reaching 11.8%. Rates then declined in November to reach 8.5%, but then again jumped to reach 9.8% in December.
Economic activity has been recovering in oil-importing developing countries, the report added, where it also indicated that Egypt has been witnessing significant leap in industrial production. This was derived from better stability in the country and the “large-scale financial support from the PGCC for investment programs”.
The high interest in buying investment certificates for the Suez Canal project was part of the reason why Egypt witnessed stabilization in 2014, the report said.
Suez Canal certificates were issued for sale to Egyptian citizens, and collected an amount of EGP 64b ($8.95b) in less than 14 days.
Other actions undertaken by Egypt in 2014 included increasing fuel and electricity prices to reform energy subsidies and as a step to reduce fiscal deficit, the report highlighted.
It further indicated that the increase of prices for the prior mentioned services along with revenue measures will aid in reducing “fiscal deficit from 14% of GDP in the fiscal year ending June 2013, to 11% of GDP in two years”.
GDP Up
Egypt’s real gross domestic product rose an annual 6.8 percent in the first quarter of the 2014-15 fiscal year, its strongest growth since 2008, driven by manufacturing and tourism, the central bank said.
“Notwithstanding the support stemming from the base effect, the expansion in economic activity during 2014-2015 Q1 came on the back of the continuous growth in the manufacturing sector and the expansion of tourism activities after several quarters of contraction,” it said in a statement.
The 2014-15 fiscal year began in July.
