Egypt’s growth is anticipated to reach 4.5% during Fiscal year (FY) 2017/ 2018 from 4.2% in last FY 2016/2017, according to World Bank (WB) report on Tuesday.
The Global Economic Prospects 2018: Middle East & North Africa report attributed the expected increase to ongoing reforms and improved business climate which provide further impetus to industrial activity and exports.
The government expects economic growth for FY2018 to reach a rate of no less than 4.6%.
Egyptian Minister of Finance Amr El-Garhy said in previous statements that the government targets achieving growth rates exceeding 6% over the medium term, in addition to overall growth and sustainability.
El-Garhy attributed the increase in Egypt’s growth in FY2018 to some elements pushing the growth such as the increase in natural gas production. Important discoveries made recently, he explained, will reach the production stage, where natural gas production is expected to increase from about 30% – about 42bn to 43bn cubic metres during the FY2017 to reach 55bn cubic metres in the FY2018.
This, in addition to providing all the country’s needs of electricity required for various investment projects after the entry of Siemens power stations into service, which adds about 50% capacity to the sector.
Increased competitiveness of the Egyptian economy following the liberalisation of the exchange rate of the pound, and the completion of state mega projects in terms of developing the Suez Canal and New Administrative Capital projects are other factors.
The report projected that Egypt’s growth rate reaches 5.9% by 2019, noting that the devaluation of the currency had a positive impact on competitiveness in the country, contributing to strong industrial production, investment, and exports in the second half of the fiscal year.
“Egypt experienced strong industrial production, investment, and exports, supported by the effects of the devaluation on competitiveness. The move to a floating exchange rate has improved competitiveness and provided a needed boost to industrial activity and exports, which are expected to be further strengthened as the business climate improves,” the report read.
The WB forecasts global economic growth to edge up to 3.1% in 2018 after a much stronger-than-expected 2017.
Meanwhile, growth in advanced economies is expected to moderate slightly to 2.2% in 2018, as central banks gradually remove their post-crisis accommodation and as an upturn in investment levels off.
The world bank added that growth in emerging market and developing economies as a whole is projected to strengthen to 4.5% in 2018, as activity in commodity exporters continues to recover.