Egypt is likely to top African countries in terms of economic growth in 2018, according to a recent report by BMI Research, a Fitch Ratings research unit.
“While the region as a whole is set to see growth accelerate, Egypt stands out as the economic outperformer in 2018, as structural reforms implemented as part of the 2016 International Monetary Fund (IMF) programme begin to spur more significant investment, while headwinds to household consumption cool,” the report added.
Economic growth of the North African nation is expected to accelerate, in line with the recovery of consumer spending and the decline of inflation rates, the report highlighted.
The economic growth path will be faced with several obstacles such as the unstable political scene in the region, but it will not be enough to affect the Egyptian economy, the report showed.
The new Investment Law will reinforce investors’ confidence and lure direct investments to the Arab world’s most populous country that in return create more jobs, the report indicated.
The IMF forecast Egypt’s economic growth to stand at 4.8% in fiscal year 2017/2018 and to reach 6% in the medium term.
Meanwhile, the report also noted that the macroeconomic backdrop will improve in 2018 across the MENA region, after slowing in 2017 due to the OPEC-stipulated oil production cuts, oil prices taking longer-than-expected to recover, and persisting political risk.
Oil exporters will benefit from robust gains in prices, forecasting Brent crude to average $65 per barrel in 2018, up from $54.8 per barrel in 2017.
Higher oil proceeds will enable a boost in government spending which will support economic activity.
Meanwhile, progress on structural reforms and overall improving political stability will drive activity in oil-importing economies.
The report holds a more optimistic outlook for the region overall.
“We do not expect a dramatic acceleration in economic activity. We forecast real GDP growth of 3% for the MENA region in 2018, up from an estimated 2.6% in 2017. Structurally lower oil prices will continue to weigh on the pace of growth in oil-exporting economies, especially as diversification plans take time to yield results. Persistent political risk will also weigh on investor confidence across the region, limiting the acceleration of growth,” the report added.