The European Bank for Reconstruction and Development (EBRD) is forecasting Egypt’s economic growth to reach 5.5% in the fiscal year 2018/19 compared with 5.3% a year earlier, noting that growth is expected to be supported by a continued boost in confidence, a recovery in tourism, an increase in foreign direct investments (FDIs), and improved competitiveness.
The EBRD’s latest Regional Economic Prospects report mentioned that the general upturn reflected improved competitiveness in the wake of currency depreciation in Egypt and Tunisia, combined with the implementation of reforms.
Early this week, Egypt’s Tourism Minister Rania Al-Mashat said Egyptian tourism is recovering, affirming the clear and continuous improvement in tourism indicators starting last year and the first quarter of this year.
Al-Mashat pointed out that the winter season began with a very promising start, asserting her ministry’s efforts to achieving sustainable development in the tourism sector, to become a stronger and more tolerant sector against shocks, and improve the efficiency of services provided to tourists.
Noteworthy, Egypt’s tourism sector serves more than 70 related industries, according to previous governmental statements.
Other positive factors are expected to include a boost inf exports, the start of natural gas production from the Zohr field, the implementation of business environment reforms, and prudent macroeconomic policies, noted the EBRD’s report.
Moreover, the report said that economic growth in the southern and eastern Mediterranean will continue to pick up speed this year, with most countries in the region enjoying their best tourism season since 2010, according to the EBRD.
However, forecasts for growth in Jordan and Lebanon have been revised down from earlier predictions in May, after the roll out of reforms in those two countries were held up because of social unrest and political instability.
In both Jordan and Lebanon, the projected growth in 2018 remains below the growth rate of the population, implying a decline in real per capita incomes, the report indicated.
The EBRD expects growth across the southern and eastern Mediterranean as a whole of 4.4% in 2018, compared with 3.8% in 2017. Expansion in 2019 is seen at 4.7%, supported by recovery in traditional drivers of growth: higher exports; the implementation of business environment reforms to attract FDIs; stronger private consumption from refugees, and greater domestic and regional political certainty.
In Morocco, growth is expected to slow down in 2018 to 3.0%, influenced by the negative base effect following favourable weather conditions for agriculture in 2017. In 2019, growth is forecast to rise to 3.5%, supported by the continued recovery in tourist arrivals; an increase in FDIs; greater competitiveness from the move to a more flexible exchange rate regime; a rebound in services and manufacturing, stronger export growth and expanded mining capacity.
The sustained growth is predicated on continuing the implementation of reforms to improve the business environment and boost productivity as well as diversifying the economy away from agriculture.
In Tunisia, growth is expected to pick up in 2019 to 3.0%, after 2.8% in 2018 and 1.9% in 2017, supported by a continued recovery in tourism and investment, stronger growth in major export markets in Europe, and the implementation of structural reforms in the run up to the elections in November 2019.
In Jordan, growth is expected to rise only modestly to 2.2% in 2018 and 2.4% in 2019, after 2.0% last year, supported by stronger private consumption from the rising refugee population; FDIs, and greater certainty and confidence stemming from fiscal consolidation. Moreover, exports will benefit from higher mining output; higher phosphate prices, and the re-opening of the border with Syria and Iraq.
The EBRD report said tourism arrivals in Jordan had increased by 7.8% in 2017, the first increase since 2010, signalling the best tourism season since the Arab uprising. The rise has continued into 2018, with a year-over-year increase in tourism receipts of 14.9% in the first half of 2018.
Growth this year in Lebanon has been negatively affected by a slowdown in the real estate sector, a major driver of growth, following the phasing out of subsidised lending. Delays in the formation of a government after the May 2018 elections also contributed to an expected slowdown in economic growth to 1.1% in 2018, from 1.5% last year.
Lebanon’s economic growth is expected to pick up to a range between 1.5 and 1.9% in 2019 depending on the pace of recovery in the Lebanese construction and financial sectors, and the extent of reconstruction in Syria.