Egypt has seen improvements in political and economic stability and a subsequent increase in the business confidence, according to the United Nation’s World Economic Outlook for 2016.
The report however added that security concerns in Egypt have had a negative impact on income from tourism. Egypt’s government is targeting between 5% and 5.5% GDP growth by the end of the current fiscal year, from the 4.2% GDP growth in FY 2014/2015.
The total budget deficit targeted for FY 2015/2016 will be EGP 251bn, representing 8.9% of GDP, instead of EGP 281bn or 9.9% in the first draft. The general revenues of the budget are also expected to grow by 28%, amounting to EGP 622.2bn compared to EGP 486bn for the current fiscal year.
However, the World Bank had a different perspective in its report issued in January. The bank has lowered its forecast for GDP economic growth in Egypt from 4.2% in FY 2014/2015 to 3.8% in the current fiscal year, a 0.7 point drop from its prior prediction in June 2015.
Seven years after the Economic Crisis, global policymakers are still facing “enormous challenges” in driving investments.
“The world economy has been held back by several major headwinds: persistent macroeconomic uncertainties and volatility, low commodity prices and declining trade flows, rising volatility in exchange rates and capital flows, stagnant investment, diminishing productivity growth, and a continued disconnect between finance and real sector activities.”
According to the UN, a modest improvement is expected to start next year, with global growth reaching 2.9% and 3.2% in 2016 and 2017, respectively.
“Unemployment is on the rise in many developing and transitioning economies, especially in South America, the report said, while it remains stubbornly high in countries such as South Africa,” the report read.
Women and youth labour participation rates declined amid higher job insecurity rates, which resulted in “a shift from salaried work to self-employment”.
“The declining employment intensity of growth in many countries, coupled with stagnant real wages, poses a challenge to promoting inclusive and sustainable economic growth, employment, and decent work for all,” the report read.
Reduction of commodity prices along with weak demand pushed global inflation to its lowest level since 2009, according to the UN, expecting annual inflation in developed economies to register 0.3% in 2015.
“Ultra-loose monetary conditions have so far prevented deflation from becoming entrenched in the developed countries,” the report read.
The UN added that major slowdown in economic growth in many developing economies and weak wage growth will control progress in poverty reduction in the short term. “Further progress in poverty reduction will rely heavily on policies to reduce inequality such as investment in education, health and infrastructure, and stronger social safety nets,” it said.